QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2011

or

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 000-54371

GRUBB & ELLIS HEALTHCARE REIT II, INC.

(Exact name of registrant as specified in its charter)

Maryland

26-4008719

(State or other jurisdiction of

(I.R.S. Employer Identification No.)

incorporation or organization)

1551 N. Tustin Avenue,

Suite 300, Santa Ana, California

92705

(Address of principal executive offices)

(Zip Code)

(714) 667-8252
(Registrants telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
þ Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files).
þ Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.

Large accelerated filer o

Accelerated filer o

Non-accelerated filer þ

Smaller reporting company o

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act).
o Yes þ No

As of July 31, 2011, there were 32,778,512 shares of common stock of Grubb & Ellis Healthcare REIT
II, Inc. outstanding.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
For the Three and Six Months Ended June 30, 2011 and 2010

The use of the words we, us or our refers to Grubb & Ellis Healthcare REIT II, Inc. and
its subsidiaries, including Grubb & Ellis Healthcare REIT II Holdings, LP, except where the context
otherwise requires.

1. Organization and Description of Business

Grubb & Ellis Healthcare REIT II, Inc., a Maryland corporation, was incorporated on January 7,
2009 and therefore we consider that our date of inception. We were initially capitalized on
February 4, 2009. We intend to invest in a diversified portfolio of real estate properties,
focusing primarily on medical office buildings and healthcare-related facilities. We may also
originate and acquire secured loans and real estate-related investments. We generally will seek
investments that produce current income. We intend to elect to be treated as a real estate
investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, or the Code, for
federal income tax purposes for our taxable year ended December 31, 2010.

We are conducting a best efforts initial public offering, or our offering, in which we are
offering to the public up to 300,000,000 shares of our common stock for $10.00 per share in our
primary offering and 30,000,000 shares of our common stock pursuant to our distribution
reinvestment plan, or the DRIP, for $9.50 per share, for a maximum offering of up to
$3,285,000,000. The United States Securities and Exchange Commission, or SEC, declared our
registration statement effective as of August 24, 2009. We will sell shares of our common stock in
our offering until August 24, 2012, unless extended by our board of directors as permitted under
applicable law, or extended with respect to shares of our common stock offered pursuant to the
DRIP. We reserve the right to reallocate the shares of our common stock we are offering between the
primary offering and the DRIP. As of June 30, 2011, we had received and accepted subscriptions in
our offering for 29,270,824 shares of our common stock, or $292,093,000, excluding shares of our
common stock issued pursuant to the DRIP.

We conduct substantially all of our operations through Grubb & Ellis Healthcare REIT II
Holdings, LP, or our operating partnership. We are externally advised by Grubb & Ellis Healthcare
REIT II Advisor, LLC, or our advisor, pursuant to an advisory agreement, or the Advisory Agreement,
between us and our advisor that has a one-year term that expires June 1, 2012 and is subject to
successive one-year renewals upon the mutual consent of the parties. Our advisor supervises and
manages our day-to-day operations and selects the properties and real estate-related investments we
acquire, subject to the oversight and approval of our board of directors. Our advisor also provides
marketing, sales and client services on our behalf. Our advisor engages affiliated entities to
provide various services to us. Our advisor is managed by and is a wholly owned subsidiary of Grubb
& Ellis Equity Advisors, LLC, or Grubb & Ellis Equity Advisors, which is a wholly owned subsidiary
of Grubb & Ellis Company, or Grubb & Ellis, or our sponsor.

We currently operate through three reportable business segments  medical office
buildings, hospitals and skilled nursing facilities. As of June 30, 2011, we had completed 22
acquisitions comprising 53 buildings and approximately 1,861,000 square feet of gross leasable
area, or GLA, for an aggregate purchase price of $411,485,000.

The summary of significant accounting policies presented below is designed to assist in
understanding our condensed consolidated financial statements. Such condensed consolidated
financial statements and the accompanying notes thereto are the representations of our management,
who are responsible for their integrity and objectivity. These accounting policies conform to
accounting principles generally accepted in the United States of America, or GAAP, in all material
respects, and have been consistently applied in preparing our accompanying condensed consolidated
financial statements.

Basis of Presentation

Our accompanying condensed consolidated financial statements include our accounts and those of
our operating partnership, the wholly owned subsidiaries of our operating partnership and all
non-wholly owned subsidiaries and any variable interest entities, or VIEs, as defined, in Financial
Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 810,
Consolidation, or ASC Topic 810, which we have concluded should be consolidated pursuant to ASC
Topic 810. We operate and intend to continue to operate in an umbrella partnership REIT structure
in which our operating partnership, or wholly owned subsidiaries of our operating partnership, will
own substantially all of the properties acquired on our behalf. We are the sole general partner of
our operating partnership and as of June 30, 2011 and December 31, 2010 own a 99.99% general
partnership interest therein. Our advisor is a limited partner and as of June 30, 2011 and December
31, 2010 owns a 0.01% noncontrolling limited partnership interest in our operating partnership.
Because we are the sole general partner of our operating partnership and have unilateral control
over its management and major operating decisions, the accounts of our operating partnership are
consolidated in our condensed consolidated financial statements. All significant intercompany
accounts and transactions are eliminated in consolidation.

Interim Unaudited Financial Data

Our accompanying condensed consolidated financial statements have been prepared by us in
accordance with GAAP in conjunction with the rules and regulations of the SEC. Certain information
and footnote disclosures required for annual financial statements have been condensed or excluded
pursuant to SEC rules and regulations. Accordingly, our accompanying condensed consolidated
financial statements do not include all of the information and footnotes required by GAAP for
complete financial statements. Our accompanying condensed consolidated financial statements reflect
all adjustments, which are, in our view, of a normal recurring nature and necessary for a fair
presentation of our financial position, results of operations and cash flows for the interim
period. Interim results of operations are not necessarily indicative of the results to be expected
for the full year; such full year results may be less favorable.

In preparing our accompanying condensed consolidated financial statements, management has
evaluated subsequent events through the financial statement issuance date. We believe that although
the disclosures contained herein are adequate to prevent the information presented from being
misleading, our accompanying condensed consolidated financial statements should be read in
conjunction with our audited consolidated financial statements and the notes thereto included in
our 2010 Annual Report on Form 10-K, as filed with the SEC on March 10, 2011.

Use of Estimates

The preparation of our condensed consolidated financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.
These estimates are made and evaluated on an on-going basis using information that is currently
available as well as various other assumptions believed to be reasonable under the circumstances.
Actual results could differ from those estimates, perhaps in material adverse ways, and those
estimates could be different under different assumptions or conditions.

As of June 30, 2011 and December 31, 2010, included in security deposits, prepaid rent and
other liabilities in our accompanying condensed consolidated balance sheets is $5,402,000 and $0,
respectively, of contingent purchase price consideration in connection with the acquisition of Yuma
Skilled Nursing Facility and Philadelphia SNF Portfolio. Such amounts are due upon certain criteria
being met within specified timeframes. See Note 14, Business Combinations, for a further
discussion.

Allowance for Uncollectible Accounts

Tenant receivables and unbilled deferred rent receivables are carried net of an allowance for
uncollectible amounts. An allowance is maintained for estimated losses resulting from the inability
of certain tenants to meet the contractual obligations under their lease agreements. We maintain an
allowance for deferred rent receivables arising from the straight line recognition of rents. Such
allowance is charged to bad debt expense which is included in general and administrative in our
accompanying condensed consolidated statements of operations. Our determination of the adequacy of
these allowances is based primarily upon evaluations of historical loss experience, the tenants
financial condition, security deposits, letters of credit, lease guarantees and current economic
conditions and other relevant factors. As of June 30, 2011 and December 31, 2010, we had $106,000
and $5,000, respectively, in allowance for uncollectible accounts which was determined necessary to
reduce receivables to our estimate of the amount recoverable. As of June 30, 2011 and December 31,
2010, we did not have an allowance for uncollectible accounts for deferred rent receivables. For
the three and six months ended June 30, 2011 and 2010, none of our receivables were directly
written off to bad debt expense and $144,000 and $0, respectively, of our deferred rent receivables
were directly written off to bad debt expense.

Segment Disclosure

ASC Topic 280, Segment Reporting, establishes standards for reporting financial and
descriptive information about a public entitys reportable segments. As of June 30, 2011, we
operate through three reportable business segments  medical office buildings, hospitals and
skilled nursing facilities. With the continued expansion of our portfolio, we believe segregation
of our operations into three reporting segments would be useful in assessing the performance of our
business in the same way that management intends to review our performance and make operating
decisions. Prior to 2011, we operated through one reportable segment. See Note 15, Segment
Reporting, for a further discussion.

Recently Issued Accounting Pronouncements

In January 2010, the FASB issued Accounting Standards Update, or ASU, 2010-06, Improving
Disclosures about Fair Value Measurements, or ASU 2010-06. ASU 2010-06 amends ASC Topic 820, Fair
Value Measurements and Disclosures, or ASC Topic 820, to require additional disclosure and clarify
existing disclosure requirements about fair value measurements. ASU 2010-06 requires entities to
provide fair value disclosures by each class of assets and liabilities, which may be a subset of
assets and liabilities within a line item in the statement of financial position. The additional
requirements also include disclosure regarding the amounts and reasons for significant transfers in
and out of Level 1 and 2 of the fair value hierarchy and separate presentation of purchases, sales,
issuances and settlements of items within Level 3 of the fair value hierarchy. The guidance
clarifies existing disclosure requirements regarding the inputs and valuation techniques used to
measure fair value for measurements that fall in either Level 2 or Level 3 of the hierarchy. ASU
2010-06 is effective for interim and annual reporting periods beginning after December 15, 2009
except for the disclosures about purchases, sales, issuances and settlements, which disclosure
requirements are effective for fiscal years beginning after December 15, 2010 and for interim
periods within those fiscal years. We adopted ASU 2010-06 on January 1, 2010 and January 1, 2011,
as applicable, which only applies to our disclosures on the fair value of financial instruments.
The adoption of ASU 2010-06 did not have a material impact on our footnote disclosures. We have
provided the applicable disclosures in Note 13, Fair Value of Financial Instruments.

In May 2011, the FASB issued ASU 2011-04, Amendments to Achieve Common Fair Value Measurements
and Disclosure Requirements in U.S. GAAP and IFRSs, or ASU 2011-04, which changes the wording used
to describe the requirements in GAAP for measuring fair value and for disclosing information about
fair value measurements in order to improve consistency in the application and description of fair
value between GAAP and
International Financial Reporting Standards, or IFRS. Additional disclosure requirements in
ASU 2011-04 include: (i) for Level 3 fair value measurements, quantitative information about
unobservable inputs used, a description of the valuation processes used by an entity, and a
qualitative discussion about the sensitivity of the measurements to changes in the unobservable
inputs; (ii) for an entitys use of a nonfinancial asset that is different from the assets highest
and best use, the reason for the difference; (iii) for financial instruments not measured at fair
value but for which disclosure of fair value is required, the fair value hierarchy level in which
the fair value measurements were determined; and (iv) the disclosure of all transfers between Level
1 and Level 2 of the fair value hierarchy. ASU 2011-04 is effective for interim and annual
reporting periods beginning after December 15, 2011. Early adoption is not permitted. We intend to
adopt ASU 2011-04 on January 1, 2012. We do not expect the adoption of ASU 2011-04 to have a
material effect on our condensed consolidated financial statements, but it will require certain
additional footnote disclosures.

3. Real Estate Investments

Our investments in our consolidated properties consisted of the following as of June 30, 2011
and December 31, 2010:

June 30, 2011

December 31, 2010

Land

$

24,220,000

$

14,592,000

Building and improvements

331,056,000

150,813,000

Furniture, fixtures and equipment

1,065,000



356,341,000

165,405,000

Less: accumulated depreciation

(5,615,000

)

(2,070,000

)

$

350,726,000

$

163,335,000

Depreciation expense for the three months ended June 30, 2011 and 2010 was
$2,124,000 and $271,000, respectively, and for the six months ended June 30, 2011 and 2010 was
$3,568,000 and $287,000, respectively. In addition to the acquisitions discussed below, for the
three months ended June 30, 2011 and 2010 we had capital expenditures of $941,000 and $0,
respectively, and for the six months ended June 30, 2011 and 2010 we had capital expenditures of
$1,334,000 and $0, respectively, on our medical office buildings.

We reimburse our advisor or its affiliates for acquisition expenses related to selecting,
evaluating, acquiring and investing in properties. The reimbursement of acquisition expenses,
acquisition fees and real estate commissions and other fees paid to unaffiliated parties will not
exceed, in the aggregate, 6.0% of the contract purchase price or total development costs, unless
fees in excess of such limits are approved by a majority of our disinterested directors, including
a majority of our independent directors. As of June 30, 2011, such fees and expenses did not exceed
6.0% of the purchase price of our acquisitions, except with respect to our acquisition of Lakewood
Ranch Medical Office Building, or the Lakewood Ranch property, and the Philadelphia SNF Portfolio.
For a further discussion see footnote (5) and footnote (6) to the table below.

During the six months ended June 30, 2011, we completed nine acquisitions comprising 28
buildings from unaffiliated parties. The aggregate purchase price of these properties was
$218,043,000 and we paid $5,992,000 in acquisition fees to our advisor or its affiliates in
connection with these acquisitions. The following is a summary of our acquisitions for the six
months ended June 30, 2011:

Represents the balance of the mortgage loans payable assumed by us or newly placed on the
property at the time of acquisition.

(2)

Represents borrowings under our secured revolving lines of credit with Bank of America, N.A.,
or Bank of America, or KeyBank National Association, or KeyBank, as defined in Note 8, Lines of Credit, at the
time of acquisition. We periodically advance funds and pay down our secured revolving lines of
credit with Bank of America and KeyBank as needed. See Note 8, Lines of Credit, for a further
discussion.

(3)

Our advisor or its affiliates were paid, as compensation for services rendered in connection
with the investigation, selection and acquisition of our properties, an acquisition fee of
2.75% of the contract purchase price for each property acquired.

(4)

On January 31, 2011, we purchased Columbia Long-Term Acute Care Hospital, which is the fourth
and final acquisition of the four hospitals comprising the Monument LTACH Portfolio.

(5)

We paid a loan defeasance fee of approximately $1,223,000, or the loan defeasance fee,
related to the repayment of the sellers loan that was secured by the Lakewood Ranch property
and had an outstanding principal balance of approximately $7,561,000 at the time of repayment.
As a result of the loan defeasance fee, the fees and expenses associated with the Lakewood
Ranch property acquisition exceeded 6.0% of the contract purchase price of the Lakewood Ranch
property. Pursuant to our charter, prior to the acquisition of the Lakewood Ranch property,
our directors, including a majority of our independent directors, not otherwise interested in
the transaction, approved the fees and expenses associated with the acquisition of the
Lakewood Ranch property in excess of the 6.0% limit and determined that such fees and expenses
were commercially competitive, fair and reasonable to us.

(6)

We paid a state and city transfer tax of approximately $1,479,000 related to the transfer of
ownership in the sale of the Philadelphia SNF Portfolio. Also, we paid additional closing
costs of $1,500,000 related to the operators costs associated with the sale of the portfolio.
As a result of the state and city transfer tax and additional closing costs, the fees and
expenses associated with the acquisition of the Philadelphia SNF Portfolio exceeded 6.0% of
the contract purchase price of the Philadelphia SNF Portfolio. Pursuant to our charter, prior
to the acquisition of the Philadelphia SNF Portfolio, our directors, including a majority of
our independent directors, not otherwise interested in the transaction, approved the fees and
expenses associated with the acquisition of the Philadelphia SNF Portfolio in excess of the
6.0% limit and determined that such fees and expenses were commercially competitive, fair and
reasonable to us.

During the six months ended June 30, 2010, we completed seven acquisitions comprising nine
buildings from unaffiliated parties. The aggregate purchase price of these properties was
$60,220,000 and we paid $1,658,000 in acquisition fees to our advisor or its affiliates in
connection with these acquisitions. The following is a summary of our acquisitions for the six
months ended June 30, 2010:

Mortgage

Acquisition Fee

Ownership

Purchase

Loans

to our Advisor

Property

Location

Type

Date Acquired

Percentage

Price

Payable(1)

or its Affiliates(2)

Lacombe Medical
Office Building

Lacombe, LA

Medical Office

03/05/10

100

%

$

6,970,000

$



$

192,000

Center for Neurosurgery
and Spine

Sartell, MN

Medical Office

03/31/10

100

%

6,500,000

3,341,000

179,000

Parkway Medical
Center

Beachwood, OH

Medical Office

04/12/10

100

%

10,900,000



300,000

Highlands Ranch Medical Pavilion

Highlands Ranch, CO

Medical Office

04/30/10

100

%

8,400,000

4,443,000

231,000

Muskogee Long-Term
Acute Care Hospital

Muskogee, OK

Hospital

05/27/10

100

%

11,000,000



303,000

St. Vincent Medical
Office Building

Cleveland, OH

Medical Office

06/25/10

100

%

10,100,000



278,000

Livingston Medical
Arts Pavilion

Livingston, TX

Medical Office

06/28/10

100

%

6,350,000



175,000

Total

$

60,220,000

$

7,784,000

$

1,658,000

(1)

Represents the balance of the mortgage loans payable assumed by us or newly placed on the
property at the time of acquisition.

(2)

Our advisor or its affiliates were paid, as compensation for services rendered in connection
with the investigation, selection and acquisition of our properties, an acquisition fee of
2.75% of the contract purchase price for each property acquired.

Identified intangible assets, net consisted of the following as of June 30, 2011 and December
31, 2010:

June 30, 2011

December 31, 2010

In place leases, net of accumulated amortization of $1,923,000 and $1,028,000
as of June 30, 2011 and December 31, 2010, respectively (with a
weighted average remaining life of 10.7 years and 11.3 years
as of June 30, 2011 and December 31, 2010, respectively)

$

28,040,000

$

13,245,000

Above market leases, net of accumulated amortization of $273,000 and $121,000
as of June 30, 2011 and December 31, 2010, respectively (with a
weighted average remaining life of 9.3 years and 9.6 years
as of June 30, 2011 and December 31, 2010, respectively)

2,833,000

1,795,000

Tenant relationships, net of accumulated amortization of $855,000 and $377,000
as of June 30, 2011 and December 31, 2010, respectively (with a
weighted average remaining life of 20.1 years and 21.8 years
as of June 30, 2011 and December 31, 2010, respectively)

21,307,000

11,912,000

Leasehold interests, net of accumulated amortization of $38,000 and $2,000
as of June 30, 2011 and December 31, 2010, respectively (with a
weighted average remaining life of 60.0 years and 62.4 years
as of June 30, 2011 and December 31, 2010, respectively)

11,491,000

1,256,000

Master leases, net of accumulated amortization of $243,000 and $95,000
as of June 30, 2011 and December 31, 2010, respectively (with a
weighted average remaining life of 1.6 years and 1.6 years
as of June 30, 2011 and December 31, 2010, respectivey)

813,000

360,000

$

64,484,000

$

28,568,000

Amortization expense for the three months ended June 30, 2011 and 2010 was
$1,307,000 and $291,000, respectively, which included $133,000 and $26,000, respectively, of
amortization recorded against rental income for above market leases and master leases and $31,000
and $0 respectively, of amortization recorded against rental expenses for leasehold interests in
our accompanying condensed consolidated statements of operations. Amortization expense for the six
months ended June 30, 2011 and 2010 was $2,134,000 and $304,000, respectively, which included
$199,000 and $26,000, respectively, of amortization recorded against rental income for above market
leases and master leases and $36,000 and $0, respectively, of amortization recorded against rental
expenses for leasehold interests in our accompanying condensed consolidated statements of
operations.

The aggregated weighted average remaining life of the identified intangible assets is 22.4
years and 17.7 years as of June 30, 2011 and December 31, 2010, respectively. Estimated
amortization expense on the identified intangible assets as of June 30, 2011, for the six months
ending December 31, 2011 and for each of the next four years ending December 31 and thereafter, is
as follows:

Other assets, net consisted of the following as of June 30, 2011 and December 31, 2010:

June 30, 2011

December 31, 2010

Deferred financing costs, net of accumulated amortization of $647,000 and $225,000
as of June 30, 2011 and December 31, 2010, respectively

$

3,234,000

$

1,390,000

Lease commissions, net of accumulated amortization of $10,000 and $1,000 as of
as of June 30, 2011 and December 31, 2010, respectively

353,000

58,000

Deferred rent receivable

1,489,000

576,000

Prepaid expenses and deposits

466,000

345,000

$

5,542,000

$

2,369,000

Amortization expense on deferred financing costs for the three months ended
June 30, 2011 and 2010 was $266,000 and $5,000, respectively, and for the six months ended June 30,
2011 and 2010 was $513,000 and $5,000, respectively. Amortization expense on deferred financing
costs is recorded to interest expense in our accompanying condensed consolidated statements of
operations. For the six months ended June 30, 2011, $42,000 of the $513,000 was related to the
write-off of deferred financing costs due to the early extinguishment of a mortgage loan payable on
Surgical Hospital of Humble. See Note 6, Mortgage Loans Payable, Net, for a further discussion.

Amortization expense on lease commissions for the three months ended June 30, 2011 and 2010
was $7,000 and $0, respectively, and for the six months ended June 30, 2011 and 2010 was $9,000 and
$0, respectively.

Estimated amortization expense on deferred financing costs and lease commissions as of June
30, 2011, for the six months ending December 31, 2011 and for each of the next four years ending
December 31 and thereafter, is as follows:

Year

Amount

2011

$

802,000

2012

1,041,000

2013

668,000

2014

420,000

2015

178,000

Thereafter

478,000

$

3,587,000

6. Mortgage Loans Payable, Net

Mortgage loans payable were $83,374,000 ($83,388,000, net of discount and premium) and
$58,648,000 ($58,331,000, net of discount) as of June 30, 2011 and December 31, 2010, respectively.

As of June 30, 2011, we had five fixed rate and four variable rate mortgage loans payable with
effective interest rates ranging from 1.29% to 6.60% per annum and a weighted average effective
interest rate of 5.26% per annum. As of June 30, 2011, we had $56,125,000 ($56,420,000, net of
discount and premium) of fixed rate debt, or 67.3% of mortgage loans payable, at a weighted average
effective interest rate of 6.06% per annum and $27,249,000 ($26,968,000, net of discount) of
variable rate debt, or 32.7% of mortgage loans payable, at a weighted average effective interest
rate of 3.62% per annum.

As of December 31, 2010, we had two fixed rate and four variable rate mortgage loans payable
with effective interest rates ranging from 1.36% to 6.00% per annum and a weighted average
effective interest rate of 5.12% per annum. As of December 31, 2010, we had $12,354,000
($12,332,000, net of discount) of fixed rate debt, or 21.1% of mortgage loans payable, at a
weighted average effective interest rate of 5.96% per annum and $46,294,000 ($45,999,000, net of
discount) of variable rate debt, or 78.9% of mortgage loans payable, at a weighted average
effective interest rate of 4.90% per annum.

Most of the mortgage loans payable may be prepaid, which in some cases are subject to a
prepayment premium. We are required by the terms of certain loan documents to meet certain
covenants, such as occupancy ratios, leverage ratios, net worth ratios, debt service coverage
ratios, liquidity ratios, operating cash flow to fixed charges ratios, distribution ratios and
reporting requirements. As of June 30, 2011 and December 31, 2010, we were in compliance with all
such covenants and requirements.

Mortgage loans payable, net consisted of the following as of June 30, 2011 and December 31,
2010:

Interest

Property

Rate(1)

Maturity Date

June 30, 2011

December 31, 2010

Fixed Rate Debt:

Highlands Ranch Medical Pavilion

5.88

%

11/11/12

$

4,337,000

$

4,383,000

Pocatello East Medical Office Building

6.00

%

10/01/20

7,881,000

7,971,000

Monument LTACH Portfolio

5.53

%

06/19/18

15,465,000



Hardy Oak Medical Office Building

6.60

%

10/10/16

5,229,000



Dixie-Lobo Medical Office Building Portfolio

6.34

%

12/28/11

23,213,000



56,125,000

12,354,000

Variable Rate Debt:

Center for Neurosurgery and Spine(2)

1.29

%

08/15/21 (callable)

3,076,000

3,184,000

Virginia Skilled Nursing Facility Portfolio(3)

5.50

%

03/14/12

9,771,000

26,810,000

Surgical Hospital of Humble(4)







9,000,000

Lawton Medical Office Building Portfolio

3.10

%

01/01/16

7,228,000

7,300,000

Muskogee Long-Term Acute Care Hospital

2.59

%

04/07/18

7,174,000



27,249,000

46,294,000

Total fixed and variable rate debt

83,374,000

58,648,000

Less: discount

(298,000

)

(317,000

)

Add: premium

312,000



Mortgage loans payable, net

$

83,388,000

$

58,331,000

(1)

Represents the per annum interest rate in effect as of June 30, 2011.

(2)

The mortgage loan payable requires monthly principal and interest payments and is due August
15, 2021; however, the principal balance is immediately due upon written request from the
seller confirming that the seller agrees to pay the interest rate swap termination amount, if
any. Additionally, the seller guarantors agreed to retain their guaranty obligations with
respect to the mortgage loan and the interest rate swap agreement. We, the seller and the
seller guarantors have also agreed to indemnify the other parties for any liability caused by
a partys breach or nonperformance of obligations under the loan.

(3)

Represents a bridge loan we secured from KeyBank which matures on March 14, 2012 or until
such time that we are able to pay such bridge loan in full by obtaining a Federal Housing
Association Mortgage loan. The maturity date may be extended by one six-month period subject
to satisfaction of certain conditions. On June 30, 2011, we used $17,039,000 in borrowings
from the line of credit with KeyBank, as defined in Note 8, to pay towards the outstanding
balance on the bridge loan. See Note 8, Lines of Credit, for a further discussion.

(4)

As of December 31, 2010, we had an outstanding mortgage loan payable balance of $9,000,000,
which was subsequently paid in full in March 2011 with no prepayment penalties assessed per
the terms of the mortgage agreement. In connection with the early extinguishment, we wrote off
$42,000 in deferred financing costs, which is included in interest expense in our accompanying
condensed consolidated statements of operations.

The principal payments due on our mortgage loans payable as of June 30, 2011, for the six
months ending December 31, 2011 and for each of the next four years ending December 31 and
thereafter, is as follows:

Year

Amount

2011

$

26,850,000

2012

15,115,000

2013

1,096,000

2014

1,137,000

2015

1,183,000

Thereafter

37,993,000

$

83,374,000

7. Derivative Financial Instruments

ASC Topic 815, Derivatives and Hedging, or ASC Topic 815, establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. We utilize derivatives such as fixed interest rate swaps to
add stability to interest expense and to manage our exposure to interest rate movements. Consistent
with ASC Topic 815, we record derivative financial instruments in our accompanying condensed
consolidated balance sheets as either an asset or a liability measured at fair value. ASC Topic 815
permits special hedge accounting if certain requirements are met. Hedge accounting allows for gains
and losses on derivatives designated as hedges to be offset by the change in value of the hedged
item or items or to be deferred in other comprehensive income.

As of June 30, 2011, no derivatives were designated as fair value hedges or cash flow hedges.
Derivatives not designated as hedges are not speculative and are used to manage our exposure to
interest rate movements, but do not meet the strict hedge accounting requirements of ASC Topic 815.
Changes in the fair value of derivative financial instruments are recorded as a component of
interest expense in gain (loss) in fair value of derivative financial instruments in our
accompanying condensed consolidated statements of operations. For the three months ended June 30,
2011 and 2010, we recorded $299,000 and $120,000, respectively, and for the six months ended June
30, 2011 and 2010, we recorded $225,000 and $120,000, respectively, as an increase to interest
expense in our accompanying condensed consolidated statements of operations related to the change
in the fair value of our derivative financial instruments.

The following table lists the derivative financial instruments held by us as of June 30, 2011:

Interest

Maturity

Notional Amount

Index

Rate

Fair Value

Instrument

Date

$

3,076,000

one month LIBOR

6.00

%

$

(377,000

)

Swap

08/15/21

7,228,000

one month LIBOR

4.41

%

(126,000

)

Swap

01/01/14

7,174,000

one month LIBOR

4.28

%

(175,000

)

Swap

05/01/14

$

17,478,000

$

(678,000

)

The following table lists the derivative financial instruments held by us as
of December 31, 2010:

Interest

Maturity

Notional Amount

Index

Rate

Fair Value

Instrument

Date

$

3,184,000

one month LIBOR

6.00

%

$

(372,000

)

Swap

08/15/21

7,300,000

one month LIBOR

4.41

%

(81,000

)

Swap

01/01/14

$

10,484,000

$

(453,000

)

See Note 13, Fair Value of Financial Instruments, for a further discussion of
the fair value of our derivative financial instruments.

On July 19, 2010, we entered into a loan agreement with Bank of America, or the Bank of
America Loan Agreement, to obtain a secured revolving credit facility with an aggregate maximum
principal amount of $25,000,000, or the Bank of America line of credit. On May 4, 2011, we modified
the Bank of America line of credit to increase the aggregate maximum principal amount from
$25,000,000 to $45,000,000, subject to certain borrowing base conditions. The proceeds of loans
made under the Bank of America line of credit may be used for working capital, capital expenditures
and other general corporate purposes (including, without limitation, property acquisitions). The
actual amount of credit available under the Bank of America line of credit at any given time is a
function of, and is subject to, certain loan to cost, loan to value and debt service coverage
ratios contained in the Bank of America Loan Agreement, as amended. The Bank of America line of
credit matures on July 19, 2012 and may be extended by one 12-month period subject to satisfaction
of certain conditions, including payment of an extension fee.

Prior to May 4, 2011, any loan made under the Bank of America line of credit bore interest at
rates equal to either: (i) the daily floating London Interbank Offered Rate, or LIBOR, plus 3.75%
per annum, subject to a minimum interest rate floor of 5.00% per annum, or (ii) if the daily
floating LIBOR rate was not available, a base rate which meant, for any day, a fluctuating rate per
annum equal to the prime rate for such day plus 3.75% per annum, subject to a minimum interest rate
floor of 5.00% per annum. On May 4, 2011, we modified the Bank of America line of credit to: (i)
reduce the interest rate to an interest rate equal to LIBOR plus 3.50% per annum or in the event
the daily LIBOR rate is not available, then Bank of Americas prime rate for such day plus 3.50%;
and (ii) remove the requirement of an interest rate floor of 5.00% per annum.

The Bank of America Loan Agreement contains various affirmative and negative covenants that
are customary for credit facilities and transactions of this type, including limitations on the
incurrence of debt and limitations on distributions by properties that serve as collateral for the
Bank of America line of credit in the event of default. The Bank of America Loan Agreement also
provides that an event of default under any other unsecured or recourse debt that we have in excess
of $5,000,000 shall constitute an event of default under the Bank of America Loan Agreement. The
Bank of America Loan Agreement also imposes the following financial covenants: (i) minimum
liquidity thresholds; (ii) a minimum ratio of operating cash flow to fixed charges; (iii) a maximum
ratio of liabilities to asset value; (iv) a maximum distribution covenant; and (v) a minimum
tangible net worth covenant. In the event of default, Bank of America has the right to terminate
its obligations under the Bank of America Loan Agreement, including the funding of future loans and
to accelerate the payment on any unpaid principal amount of all outstanding loans and interest
thereon and may seek foreclosure on any properties securing the Bank of America line of credit. As
of June 30, 2011 and December 31, 2010, we were in compliance with all such covenants and
requirements.

Based on the value of the properties securing the Bank of America line of credit, our
aggregate borrowing capacity under the Bank of America line of credit was $31,115,000 and
$22,600,000, respectively, as of June 30, 2011 and December 31, 2010. Borrowings outstanding under
the Bank of America line of credit totaled $22,000,000 and $11,800,000, respectively, as of June
30, 2011 and December 31, 2010. As of June 30, 2011 and December 31, 2010, $9,115,000 and
$10,800,000, respectively, remained available under the Bank of America line of credit. The
weighted-average interest rate of borrowings as of June 30, 2011 and December 31, 2010 was 3.69%
and 5.00% per annum, respectively. The Bank of America line of credit is secured by Lacombe Medical
Office Building, Parkway Medical Center, Livingston Medical Arts Pavilion, St. Vincent Medical
Office Building, Sylva Medical Office Building and Ennis Medical Office Building as of June 30,
2011.

KeyBank National Association

On June 30, 2011, we entered into a loan agreement with KeyBank, or the KeyBank Loan
Agreement, to obtain a secured revolving credit facility with an aggregate maximum principal amount
of $71,500,000, or the KeyBank line of credit. The proceeds of loans made under the KeyBank line of
credit may be used to acquire, finance or refinance eligible properties or for other incidental
purposes as approved by KeyBank. The KeyBank line
of credit matures on June 30, 2014 and may be extended by one 12-month period subject to
satisfaction of certain conditions, including payment of an extension fee.

During the initial and extended term of the KeyBank Loan Agreement, any loan made under the
KeyBank Loan Agreement shall bear interest at a per annum rate depending on the type of designated
loan being provided for under the KeyBank Loan Agreement. As a result, the interest rates shall be
as follows: (i) for loans designated as LIBOR Loans, as defined in the KeyBank Loan Agreement, the
interest rate shall be based on LIBOR, as defined in the KeyBank Loan Agreement, plus 3.50%; (ii)
for loans designated as Prime Rate Loans, as defined in the KeyBank Loan Agreement, the interest
rate shall be equal to a fluctuating interest rate per annum equal to the rate of interest
established by KeyBank as its Prime Rate, plus 0.75% per annum; and (iii) for loans designated as
Base Rate Loans, as defined in the KeyBank Loan Agreement, the interest rate shall be equal to a
fluctuating interest rate equal to 3.50% per annum plus the greater of: (a) a rate of interest
established by KeyBank as its Prime Rate; (b) the Federal Funds Rate plus 0.50% per annum; or (c)
the interest rate then in effect for LIBOR Loans, plus 1.00% per annum.

The KeyBank Loan Agreement contains various affirmative and negative covenants that are
customary for credit facilities and transactions of this type, including limitations on the
incurrence of debt by our operating partnership and its subsidiaries that own properties that serve
as collateral for the KeyBank line of credit. The KeyBank Loan Agreement also imposes the following
financial covenants: (i) a maximum consolidated total leverage ratio; (ii) a minimum debt service
coverage ratio; (iii) a minimum consolidated net worth covenant; and (iv) a minimum rent coverage
ratio. In addition, the KeyBank Loan Agreement includes events of default that are customary for
credit facilities and transactions of this type. In the event of default, KeyBank has the right to
assert its remedies and terminate its obligations under the KeyBank Loan Agreement, including the
termination of funding of future loans, acceleration of payment on any unpaid principal amount of
all outstanding loans and interest thereon and foreclosure on the properties securing the KeyBank
line of credit. As of June 30, 2011, we were in compliance with all such covenants and
requirements.

Based on the value of the properties securing the KeyBank line of credit, the aggregate
borrowing capacity and the borrowings outstanding were $71,139,000 as of June 30, 2011. As of June
30, 2011, $0 remained available under the KeyBank line of credit. The weighted-average interest
rate of borrowings as of June 30, 2011 was 3.74% per annum. The KeyBank line of credit is secured
by four facilities of the Virginia Skilled Nursing Facility Portfolio, the Yuma Skilled Nursing
Facility and the Philadelphia SNF Portfolio as of June 30, 2011.

9. Identified Intangible Liabilities, Net

Identified intangible liabilities, net consisted of the following as of June 30, 2011 and
December 31, 2010:

June 30, 2011

December 31, 2010

Below market leases, net of accumulated amortization of $84,000 and $42,000
as of June 30, 2011 and December 31, 2010, respectively (with a
weighted average remaining life of 15.3 years and 16.9 years as of
June 30, 2011 and December 31, 2010, respectively)

$

621,000

$

502,000

Amortization expense on below market leases for the three months ended June 30, 2011 and 2010
was $29,000 and $5,000, respectively, and for the six months ended June 30, 2011 and 2010 was
$50,000 and $5,000, respectively. Amortization expense on below market leases is recorded to rental
income in our accompanying condensed consolidated statements of operations.

Estimated amortization expense on below market leases as of June 30, 2011, for the six months
ending December 31, 2011 and for each of the next four years ending December 31 and thereafter, is
as follows:

Year

Amount

2011

$

63,000

2012

89,000

2013

41,000

2014

34,000

2015

29,000

Thereafter

365,000

$

621,000

10. Commitments and Contingencies

Litigation

We are not presently subject to any material litigation nor, to our knowledge, is any material
litigation threatened against us, which if determined unfavorably to us, would have a material
adverse effect on our consolidated financial position, results of operations or cash flows.

Environmental Matters

We follow a policy of monitoring our properties for the presence of hazardous or toxic
substances. While there can be no assurance that a material environmental liability does not exist
at our properties, we are not currently aware of any environmental liability with respect to our
properties that would have a material effect on our consolidated financial position, results of
operations or cash flows. Further, we are not aware of any material environmental liability or any
unasserted claim or assessment with respect to an environmental liability that we believe would
require additional disclosure or the recording of a loss contingency.

Other Organizational and Offering Expenses

Our organizational and offering expenses, other than selling commissions and the dealer
manager fee, are being paid by our advisor or its affiliates on our behalf. Other organizational
and offering expenses include all expenses (other than selling commissions and the dealer manager
fee which generally represent 7.0% and 3.0%, respectively, of our gross offering proceeds) to be
paid by us in connection with our offering. These other organizational and offering expenses will
only become our liability to the extent they do not exceed 1.0% of the gross proceeds from the sale
of shares of our common stock in our offering, other than shares of our common stock sold pursuant
to the DRIP. As of June 30, 2011 and December 31, 2010, our advisor and its affiliates had incurred
expenses on our behalf of $2,953,000 and $2,701,000, respectively, in excess of 1.0% of the gross
proceeds of our offering, and therefore, these expenses are not recorded in our accompanying
condensed consolidated financial statements as of June 30, 2011 and December 31, 2010. To the
extent we raise additional funds from our offering, these amounts may become our liability.

When recorded by us, other organizational expenses will be expensed as incurred, and offering
expenses are charged to stockholders equity as such amounts are reimbursed to our advisor or its
affiliates from the gross proceeds of our offering. See Note 11, Related Party Transactions 
Offering Stage, for a further discussion of other organizational and offering expenses.

Other

Our other commitments and contingencies include the usual obligations of real estate owners
and operators in the normal course of business. In our view, these matters are not expected to have
a material adverse effect on our consolidated financial position, results of operations or cash
flows.

All of our executive officers and our non-independent directors are also executive officers
and employees and/or holders of a direct or indirect interest in our advisor, our sponsor, Grubb &
Ellis Equity Advisors or other affiliated entities. We entered into the Advisory Agreement with our
advisor and a dealer manager agreement with Grubb & Ellis Securities, Inc., or Grubb & Ellis
Securities, or our dealer manager. Until April 18, 2011, Grubb & Ellis Securities served as the
dealer manager of our offering. Effective as of April 19, 2011, the dealer manager agreement with
Grubb & Ellis Securities was assigned to, and assumed by, Grubb & Ellis Capital Corporation, a
wholly owned subsidiary of our sponsor. These agreements entitle our advisor, our dealer manager
and their affiliates to specified compensation for certain services, as well as reimbursement of
certain expenses. In the aggregate, for the three months ended June 30, 2011 and 2010, we incurred
$14,737,000 and $4,762,000, respectively, and for the six months ended June 30, 2011 and 2010, we
incurred $23,130,000 and $7,844,000, respectively, to our advisor or its affiliates as detailed
below.

Offering Stage

Selling Commissions

Our dealer manager receives selling commissions of up to 7.0% of the gross offering
proceeds from the sale of shares of our common stock in our offering other than shares of our
common stock sold pursuant to the DRIP. Our dealer manager may re-allow all or a portion of these
fees to participating broker-dealers. For the three months ended June 30, 2011 and 2010, we
incurred $5,508,000 and $2,077,000 respectively, and for the six months ended June 30, 2011 and
2010, we incurred $9,577,000 and $3,763,000, respectively, in selling commissions to our dealer
manager. Such commissions are charged to stockholders equity as such amounts are reimbursed to our
dealer manager from the gross proceeds of our offering.

Dealer Manager Fee

Our dealer manager receives a dealer manager fee of up to 3.0% of the gross offering proceeds
from the sale of shares of our common stock in our offering other than shares of our common stock
sold pursuant to the DRIP. Our dealer manager may re-allow all or a portion of these fees to
participating broker-dealers. For the three months ended June 30, 2011 and 2010, we incurred
$2,409,000 and $915,000 respectively, and for the six months ended June 30, 2011 and 2010, we
incurred $4,205,000 and $1,655,000, respectively, in dealer manager fees to our dealer manager or
its affiliates. Such fees and reimbursements are charged to stockholders equity as such amounts
are reimbursed to our dealer manager or its affiliates from the gross proceeds of our offering.

Other Organizational and Offering Expenses

Our organizational and offering expenses are paid by our advisor or Grubb & Ellis Equity
Advisors on our behalf. Our advisor or Grubb & Ellis Equity Advisors are reimbursed for actual
expenses incurred up to 1.0% of the gross offering proceeds from the sale of shares of our common
stock in our offering other than shares of our common stock sold pursuant to the DRIP. For the
three months ended June 30, 2011 and 2010, we incurred $805,000 and $309,000 respectively, and for
the six months ended June 30, 2011 and 2010, we incurred $1,405,000 and $556,000, respectively, in
offering expenses to our advisor or Grubb & Ellis Equity Advisors. Other organizational expenses
are expensed as incurred, and offering expenses are charged to stockholders equity as such amounts
are reimbursed to our advisor or Grubb & Ellis Equity Advisors from the gross proceeds of our
offering.

Acquisition and Development Stage

Acquisition Fee

Our advisor or its affiliates receive an acquisition fee of up to 2.75% of the contract
purchase price for each property we acquire or 2.0% of the origination or acquisition price for any
real estate-related investment we originate or acquire. Our advisor or its affiliates are entitled
to receive these acquisition fees for properties and real
estate-related investments we acquire with funds raised in our offering, including
acquisitions completed after the termination of the Advisory Agreement, or funded with net proceeds
from the sale of a property or real estate-related investment, subject to certain conditions.

For the three months ended June 30, 2011 and 2010, we incurred $4,969,000 and $1,287,000
respectively, and for the six months ended June 30, 2011 and 2010, we incurred $5,992,000 and
$1,658,000, respectively, in acquisition fees to our advisor or its affiliates. Acquisition fees in
connection with the acquisition of properties are expensed as incurred in accordance with ASC Topic
805, Business Combinations, or ASC Topic 805, and are included in acquisition related expenses in
our accompanying condensed consolidated statements of operations.

Development Fee

Our advisor or its affiliates receive, in the event our advisor or its affiliates provide
development-related services, a development fee in an amount that is usual and customary for
comparable services rendered for similar projects in the geographic market where the services are
provided; however, we will not pay a development fee to our advisor or its affiliates if our
advisor elects to receive an acquisition fee based on the cost of such development.

For the three months ended June 30, 2011 and 2010 and for the six months ended June 30, 2011
and 2010, we did not incur any development fees to our advisor or its affiliates.

Reimbursement of Acquisition Expenses

Our advisor or its affiliates are reimbursed for acquisition expenses related to selecting,
evaluating and acquiring assets, which will be reimbursed regardless of whether an asset is
acquired. The reimbursement of acquisition expenses, acquisition fees and real estate commissions
and other fees paid to unaffiliated parties will not exceed, in the aggregate, 6.0% of the purchase
price or total development costs, unless fees in excess of such limits are approved by a majority
of our disinterested directors, including a majority of our independent directors, not otherwise interested in the
transaction. As of June 30, 2011, such fees and expenses did not
exceed 6.0% of the purchase price or total development costs, except with respect to our
acquisition of the Lakewood Ranch property and the Philadelphia SNF Portfolio. For a further
discussion, please see footnote (5) and footnote (6) in Note 3, Real Estate Investments 
Acquisitions in 2011.

For the three months ended June 30, 2011 and 2010, we incurred $11,000 and $3,000,
respectively, and for the six months ended June 30, 2011 and 2010, we incurred $19,000 and $11,000,
respectively, in acquisition expenses to our advisor or its affiliates. Reimbursements of
acquisition expenses are expensed as incurred in accordance with ASC Topic 805 and are included in
acquisition related expenses in our accompanying condensed consolidated statements of operations.

Operational Stage

Asset Management Fee

Our advisor or its affiliates are paid a monthly fee for services rendered in connection with
the management of our assets equal to one-twelfth of 0.85% of average invested assets, subject to
our stockholders receiving distributions in an amount equal to 5.0% per annum, cumulative,
non-compounded, of average invested capital. For such purposes, average invested assets means the
average of the aggregate book value of our assets invested in real estate properties and real
estate-related investments, before deducting depreciation, amortization, bad debt and other similar
non-cash reserves, computed by taking the average of such values at the end of each month during
the period of calculation; and average invested capital means, for a specified period, the
aggregate issue price of shares of our common stock purchased by our stockholders, reduced by
distributions of net sales proceeds by us to our stockholders and by any amounts paid by us to
repurchase shares of our common stock pursuant to our share repurchase plan.

For the three months ended June 30, 2011 and 2010, we incurred $656,000 and $80,000
respectively, and for the six months ended June 30, 2011 and 2010, we incurred $1,096,000 and
$85,000, respectively, in asset
management fees to our advisor or its affiliates, which is included in general and
administrative in our accompanying condensed consolidated statements of operations.

Our advisor or its affiliates are paid a monthly property management fee of up to 4.0% of the
gross monthly cash receipts from each property managed by our advisor or its affiliates. Our
advisor or its affiliates may sub-contract its duties to any third-party, including for fees less
than the property management fees payable to our advisor, or its affiliates. In addition to the
above property management fee, for each property managed directly by entities other than our
advisor or its affiliates, we will pay our advisor or its affiliates a monthly oversight fee of up
to 1.0% of the gross cash receipts from the property; provided however, that in no event will we
pay both a property management fee and an oversight fee to our advisor or its affiliates with
respect to the same property.

For the three months ended June 30, 2011 and 2010, we incurred $193,000 and $42,000
respectively, and for the six months ended June 30, 2011 and 2010, we incurred $313,000 and
$44,000, respectively, in property management fees and oversight fees to our advisor or its
affiliates, which is included in rental expenses in our accompanying condensed consolidated
statements of operations.

On-site Personnel and Engineering Payroll

For the three months ended June 30, 2011 and 2010, our advisor or its affiliates incurred
on our behalf $24,000 and $2,000, respectively, and for the six months ended June 30, 2011 and
2010, our advisor or its affiliates incurred on our behalf $48,000 and $2,000, respectively, in
payroll for on-site personnel and engineering, which is included in rental expenses in our
accompanying condensed consolidated statements of operations.

Lease Fees

We may pay our advisor or its affiliates a separate fee for any leasing activities in an
amount not to exceed the fee customarily charged in arms-length transactions by others rendering
similar services in the same geographic area for similar properties as determined by a survey of
brokers and agents in such area. Such fee is generally expected to range from 3.0% to 8.0% of the
gross revenues generated during the initial term of the lease.

For the three months ended June 30, 2011 and 2010, we incurred $56,000 and $0, respectively,
and for the six months ended June 30, 2011 and 2010, we incurred $304,000 and $0, respectively, in
lease fees to our advisor or its affiliates, which is capitalized as lease commissions and included
in other assets, net in our accompanying condensed consolidated balance sheets.

Construction Management Fee

In the event that our advisor or its affiliates assist with planning and coordinating the
construction of any capital or tenant improvements, our advisor or its affiliates will be paid a
construction management fee of up to 5.0% of the cost of such improvements. For the three months
ended June 30, 2011 and 2010, we incurred $13,000 and $0, respectively, and for the six months
ended June 30, 2011 and 2010, we incurred $13,000 and $0, respectively, in construction management
fees to our advisor or its affiliates. Construction management fees are capitalized as part of the
associated asset and included in operating properties, net on our accompanying condensed
consolidated balance sheets.

Operating Expenses

We reimburse our advisor or its affiliates for operating expenses incurred in rendering
services to us, subject to certain limitations. However, we cannot reimburse our advisor or its
affiliates at the end of any fiscal quarter for total operating expenses that, in the four
consecutive fiscal quarters then ended, exceed the greater of: (i) 2.0% of our average invested
assets, as defined in the Advisory Agreement, or (ii) 25.0% of our net income, as defined in the
Advisory Agreement, unless our independent directors determine that such excess expenses are
justified based on unusual and nonrecurring factors. For the 12 months ended June 30, 2011, our
operating expenses did not exceed
this limitation. Our operating expenses as a percentage of average invested assets and as a
percentage of net income were 1.5% and (91.5)%, respectively, for the 12 months ended June 30,
2011.

For the three months ended June 30, 2011 and 2010, Grubb & Ellis Equity Advisors incurred
operating expenses on our behalf of $0 and $5,000, respectively, and for the six months ended June
30, 2011 and 2010, Grubb & Ellis Equity Advisors incurred operating expenses on our behalf of
$9,000 and $14,000, respectively, which is included in general and administrative in our
accompanying condensed consolidated statements of operations.

Related Party Services Agreement

We entered into a services agreement, effective September 21, 2009, or the Transfer Agent
Services Agreement, with Grubb & Ellis Equity Advisors, Transfer Agent, LLC, formerly known as
Grubb & Ellis Investor Solutions, LLC, or our transfer agent, for transfer agent and investor
services. The Transfer Agent Services Agreement has an initial one-year term and shall thereafter
automatically be renewed for successive one-year terms. Since our transfer agent is an affiliate of
our advisor, the terms of the Transfer Agent Services Agreement were approved and determined by a
majority of our directors, including a majority of our independent directors, as fair and
reasonable to us and at fees which are no greater than that which would be paid to an unaffiliated
third party for similar services. The Transfer Agent Services Agreement requires our transfer agent
to provide us with a 180 day advance written notice for any termination, while we have the right to
terminate upon 60 days advance written notice.

For the three months ended June 30, 2011 and 2010, we incurred expenses of $80,000 and
$29,000, respectively, and for the six months ended June 30, 2011 and 2010, we incurred expenses of
$129,000 and $43,000, respectively, for investor services that our transfer agent provided to us,
which is included in general and administrative in our accompanying condensed consolidated
statements of operations.

For the three months ended June 30, 2011 and 2010, Grubb & Ellis Equity Advisors incurred
expenses of $27,000 and $13,000, respectively, and for the six months ended June 30, 2011 and 2010,
Grubb & Ellis Equity Advisors incurred expenses of $47,000 and $23,000, respectively, for
subscription agreement processing services that our transfer agent provided to us. As an other
organizational and offering expense, these subscription agreement processing expenses will only
become our liability to the extent cumulative other organizational and offering expenses do not
exceed 1.0% of the gross proceeds from the sale of shares of our common stock in our offering,
other than shares of our common stock sold pursuant to the DRIP.

Compensation for Additional Services

Our advisor or its affiliates are paid for services performed for us other than those required
to be rendered by our advisor or its affiliates under the Advisory Agreement. The rate of
compensation for these services must be approved by a majority of our board of directors, including
a majority of our independent directors, and cannot exceed an amount that would be paid to
unaffiliated third parties for similar services. For the three months ended June 30, 2011 and 2010,
we incurred expenses of $13,000 and $13,000, respectively, and for the six months ended June 30,
2011 and 2010, we incurred expenses of $20,000 and $13,000, respectively, for internal controls
compliance services our advisor or its affiliates provided to us.

Liquidity Stage

Disposition Fees

For services relating to the sale of one or more properties, our advisor or its affiliates
will be paid a disposition fee up to the lesser of 2.0% of the contract sales price or 50.0% of a
customary competitive real estate commission given the circumstances surrounding the sale, in each
case as determined by our board of directors, including a majority of our independent directors,
upon the provision of a substantial amount of the services in the sales effort. The amount of
disposition fees paid, when added to the real estate commissions paid to unaffiliated parties, will
not exceed the lesser of the customary competitive real estate commission or an amount equal to
6.0% of the contract sales price. For the three months ended June 30, 2011 and 2010 and for the six
months ended June 30, 2011 and 2010, we did not incur any disposition fees to our advisor or its
affiliates.

In the event of liquidation, our advisor will be paid a subordinated distribution of net sales
proceeds. The distribution will be equal to 15.0% of the net proceeds from the sales of properties,
after distributions to our stockholders, in the aggregate, of (i) a full return of capital raised
from stockholders (less amounts paid to repurchase shares of our common stock pursuant to our share
repurchase plan) plus (ii) an annual 8.0% cumulative, non-compounded return on the gross proceeds
from the sale of shares of our common stock, as adjusted for distributions of net sale proceeds.
Actual amounts to be received depend on the sale prices of properties upon liquidation. For the
three months ended June 30, 2011 and 2010 and for the six months ended June 30, 2011 and 2010, we
did not incur any such distributions to our advisor.

Subordinated Distribution upon Listing

Upon the listing of shares of our common stock on a national securities exchange, our advisor
will be paid a distribution equal to 15.0% of the amount by which (i) the market value of our
outstanding common stock at listing plus distributions paid prior to listing exceeds (ii) the sum
of the total amount of capital raised from stockholders (less amounts paid to repurchase shares of
our common stock pursuant to our share repurchase plan) and the amount of cash that, if distributed
to stockholders as of the date of listing, would have provided them an annual 8.0% cumulative,
non-compounded return on the gross proceeds from the sale of shares of our common stock through the
date of listing. Actual amounts to be received depend upon the market value of our outstanding
stock at the time of listing among other factors. For the three months ended June 30, 2011 and 2010
and for the six months ended June 30, 2011 and 2010, we did not incur any such distributions to our
advisor.

Subordinated Distribution Upon Termination

Upon termination or non-renewal of the Advisory Agreement, our advisor will be entitled to a
subordinated distribution from our operating partnership equal to 15.0% of the amount, if any, by
which (i) the appraised value of our assets on the termination date, less any indebtedness secured
by such assets, plus total distributions paid through the termination date, exceeds (ii) the sum of
the total amount of capital raised from stockholders (less amounts paid to repurchase shares of our
common stock pursuant to our share repurchase plan) and the total amount of cash that, if
distributed to them as of the termination date, would have provided them an annual 8.0% cumulative,
non-compounded return on the gross proceeds from the sale of shares of our common stock through the
termination date. In addition, our advisor may elect to defer its right to receive a subordinated
distribution upon termination until either a listing or other liquidity event, including a
liquidation, sale of substantially all of our assets or merger in which our stockholders receive,
in exchange for their shares of our common stock, shares of a company that are traded on a national
securities exchange.

As of June 30, 2011 and December 31, 2010, we had not recorded any charges to earnings related
to the subordinated distribution upon termination.

Executive Stock Purchase Plan

On April 7, 2011, our Chairman of the Board of Directors and Chief Executive Officer, Jeffrey
T. Hanson, and our President and Chief Operating Officer, Danny Prosky, each executed an executive
stock purchase plan, or the Plan, whereby each executive has irrevocably agreed to invest 100% and
50.0%, respectively, of their after-tax cash compensation as employees of our sponsor directly into
our company by purchasing shares of our common stock on a regular basis, corresponding to regular
payroll periods and the payment of any other cash compensation, including bonuses. Their first
investment under the Plan began with their regularly scheduled payroll payment on April 29, 2011
and will terminate on the earlier of (i) December 31, 2011, (ii) the termination of our offering,
(iii) any suspension of our offering by our board of directors or regulatory body, or (iv) the date
upon which the number of shares of our common stock owned by Mr. Hanson or Mr. Prosky, when
combined with all their other investments in our common stock, exceeds the ownership limits set
forth in our charter. The shares will be
purchased pursuant to our offering at a price of $9.00 per share, reflecting the elimination
of selling commissions and the dealer manager fee in connection with such transactions. For the
three and six months ended June 30, 2011, Mr. Hanson invested $45,000 of his compensation and we
issued 5,013 shares pursuant to his Plan. For the three and six months ended June 30, 2011, Mr.
Prosky invested $17,000 of his compensation and we issued 1,904 shares pursuant to his Plan.

The following amounts were outstanding to affiliates as of June 30, 2011 and December 31,
2010:

Fee

June 30, 2011

December 31, 2010

Selling commissions and dealer manager
fees

$

600,000

$

539,000

Lease commissions

49,000

5,000

Asset and property management fees

344,000

166,000

Offering costs

119,000

86,000

Operating expenses

80,000

16,000

On-site personnel and engineering payroll

8,000

7,000

Acquisition expenses

14,000



Construction management fees

27,000

21,000

$

1,241,000

$

840,000

12. Equity

Preferred Stock

Our charter authorizes us to issue 200,000,000 shares of our $0.01 par value preferred stock.
As of June 30, 2011 and December 31, 2010, no shares of preferred stock were issued and
outstanding.

Common Stock

We are offering and selling to the public up to 300,000,000 shares of our common stock,
par value $0.01 per share, for $10.00 per share and up to 30,000,000 shares of our common stock,
par value $0.01 per share, to be issued pursuant to the DRIP for $9.50 per share. Our charter
authorizes us to issue 1,000,000,000 shares of our common stock.

On February 4, 2009, our advisor purchased 20,000 shares of common stock for total cash
consideration of $200,000 and was admitted as the initial stockholder. We used the proceeds from
the sale of shares of our common stock to our advisor to make an initial capital contribution to
our operating partnership.

On October 21, 2009, we granted an aggregate of 15,000 shares of our restricted common stock
to our independent directors. On each of June 8, 2010 and June 14, 2011, in connection with their
re-election, we granted an aggregate of 7,500 shares of our restricted common stock to our
independent directors. Through June 30, 2011, we had issued 29,270,824 shares of our common stock
in connection with our offering and 537,451 shares of our common stock pursuant to the DRIP, and we
had also repurchased 74,136 shares of our common stock under our share repurchase plan. As of June
30, 2011 and December 31, 2010, we had 29,784,139 and 15,452,668 shares of our common stock issued
and outstanding, respectively.

Noncontrolling Interests

On February 4, 2009, our advisor made an initial capital contribution of $2,000 to our
operating partnership in exchange for 200 partnership units.

As of June 30, 2011 and December 31, 2010, we owned a 99.99% general partnership interest in
our operating partnership and our advisor owned a 0.01% limited partnership interest in our
operating partnership. As such, 0.01% of the earnings of our operating partnership are allocated to
noncontrolling interests, subject to certain limitations.

In addition, as of June 30, 2011 and December 31, 2010, we owned a 98.75% interest in the
consolidated limited liability company that owns Pocatello East Medical Office Building, or the
Pocatello East MOB property, that was purchased on July 27, 2010. As such, 1.25% of the earnings of
the Pocatello East MOB property are allocated to noncontrolling interests.

Distribution Reinvestment Plan

We adopted the DRIP that allows stockholders to purchase additional shares of our common stock
through the reinvestment of distributions, subject to certain conditions. We have registered and
reserved 30,000,000 shares of our common stock for sale in our offering pursuant to the DRIP. For
the three months ended June 30, 2011 and 2010, $1,833,000 and $376,000, respectively, in
distributions were reinvested and 192,935 and 39,671 shares of our common stock, respectively, were
issued pursuant to the DRIP. For the six months ended June 30, 2011 and 2010, $3,121,000 and
$502,000, respectively, in distributions were reinvested and 328,496 and 52,885 shares of our
common stock, respectively, were issued pursuant to the DRIP. As of June 30, 2011 and December 31,
2010, a total of $5,106,000 and $1,985,000, respectively, in distributions were reinvested and
537,451 and 208,955 shares of our common stock, respectively, were issued pursuant to the DRIP.

Share Repurchase Plan

Our board of directors has approved a share repurchase plan. Our share repurchase plan
allows for repurchases of shares of our common stock by us when certain criteria are met. Share
repurchases will be made at the sole discretion of our board of directors. All repurchases are
subject to a one-year holding period, except for repurchases made in connection with a
stockholders death or qualifying disability, as defined in our share repurchase plan. Subject to
the availability of the funds for share repurchases, we will limit the number of shares of our
common stock repurchased during any calendar year to 5.0% of the weighted average number of shares
of our common stock outstanding during the prior calendar year; provided, however, that shares
subject to a repurchase requested upon the death of a stockholder will not be subject to this cap.
Funds for the repurchase of shares of our common stock will come exclusively from the cumulative
proceeds we receive from the sale of shares of our common stock pursuant to the DRIP.

Under our share repurchase plan, repurchase prices range from $9.25, or 92.5% of the price
paid per share, following a one year holding period to an amount not less than 100% of the price
paid per share following a four year holding period. However, if shares of our common stock are to
be repurchased in connection with a stockholders death or qualifying disability, the repurchase
price will be no less than 100% of the price paid to acquire the shares of our common stock from
us. Furthermore, our share repurchase plan provides that if there are insufficient funds to honor
all repurchase requests, pending requests will be honored among all requests for repurchase in any
given repurchase period, as follows: first, pro rata as to repurchases sought upon a stockholders
death; next, pro rata as to repurchases sought by stockholders with a qualifying disability; and,
finally, pro rata as to other repurchase requests.

For the three months ended June 30, 2011, we received share repurchase requests and
repurchased 44,636 shares of our common stock for an aggregate of $423,000 at an average repurchase
price of $9.47 per share, and for the six months ended June 30, 2011, we received share repurchase
requests and repurchased 53,136 shares of our common stock for an aggregate of $501,000 at an
average repurchase price of $9.44 per share, using proceeds we received from the sale of shares of
our common stock pursuant to the DRIP. We did not receive any share repurchase requests for the
three and six months ended June 30, 2010. As of June 30, 2011 and December 31, 2010, we had
received share repurchase requests and had repurchased 74,136 shares of our common stock for an
aggregate of $711,000 at an average price of $9.60 per share and 21,000 shares of our common stock
for an aggregate of $210,000 at an average price of $10.00 per share, respectively, using proceeds
we received from the sale of shares of our common stock pursuant to the DRIP.

We adopted the 2009 Incentive Plan, or our incentive plan, pursuant to which our board of
directors or a committee of our independent directors may make grants of options, restricted shares
of common stock, stock
purchase rights, stock appreciation rights or other awards to our independent directors,
employees and consultants. The maximum number of shares of our common stock that may be issued
pursuant to our incentive plan is 2,000,000.

On October 21, 2009, we granted an aggregate of 15,000 shares of our restricted common stock,
as defined in our incentive plan, to our independent directors in connection with their initial
election to our board of directors, of which 20.0% vested on the grant date and 20.0% will vest on
each of the first four anniversaries of the date of grant. On each of June 8, 2010 and June 14,
2011, in connection with their re-election, we granted an aggregate of 7,500 shares of our
restricted common stock, as defined in our incentive plan, to our independent directors, which will
vest over the same period described above. The fair value of each share of our restricted common
stock was estimated at the date of grant at $10.00 per share, the per share price of shares in our
offering, and with respect to the initial 20.0% of shares that vested on the grant date, expensed
as compensation immediately, and with respect to the remaining shares, amortized on a straight-line
basis over the vesting period. Shares of our restricted common stock may not be sold, transferred,
exchanged, assigned, pledged, hypothecated or otherwise encumbered. Such restrictions expire upon
vesting. Shares of our restricted common stock have full voting rights and rights to dividends. For
the three months ended June 30, 2011 and 2010, we recognized compensation expense of $27,000 and
$23,000, respectively, and for the six months ended June 30, 2011 and 2010, we recognized
compensation expense of $38,000 and $31,000, respectively, related to the restricted common stock
grants ultimately expected to vest. ASC Topic 718, Compensation  Stock Compensation, requires
forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods
if actual forfeitures differ from those estimates. For the three and six months ended June 30, 2011
and 2010, we did not assume any forfeitures. Stock compensation expense is included in general and
administrative in our accompanying condensed consolidated statements of operations.

As of June 30, 2011 and December 31, 2010, there was $173,000 and $136,000, respectively, of
total unrecognized compensation expense, net of estimated forfeitures, related to nonvested shares
of our restricted common stock. This expense is expected to be recognized over a remaining weighted
average period of 2.96 years.

As of June 30, 2011 and December 31, 2010, the fair value of the nonvested shares of our
restricted common stock was $195,000 and $150,000, respectively. A summary of the status of the
nonvested shares of our restricted common stock as of June 30, 2011 and December 31, 2010, and the
changes for the six months ended June 30, 2011, is presented below:

Weighted

Average Grant

Number of Nonvested Shares of

Date Fair

our Restricted Common Stock

Value

Balance  December 31, 2010

15,000

$

10.00

Granted

7,500

$

10.00

Vested

(3,000

)

$

10.00

Forfeited



$



Balance  June 30, 2011

19,500

$

10.00

Expected to vest  June 30, 2011

19,500

$

10.00

13. Fair Value of Financial Instruments

Financial Instruments Reported at Fair Value

Derivative Financial Instruments

We use interest rate swaps to manage interest rate risk associated with floating rate debt.
The valuation of these instruments is determined using widely accepted valuation techniques
including a discounted cash flow analysis on the expected cash flows of each derivative. This
analysis reflects the contractual terms of the derivatives, including the period to maturity, and
uses observable market-based inputs, including interest rate curves, foreign exchange rates and
implied volatilities. The fair values of interest rate swaps are determined using the market
standard methodology of netting the discounted future fixed cash payments and the discounted
expected variable cash receipts. The variable cash receipts are based on an expectation of future
interest rates (forward curves) derived from observable market interest rate curves.

To comply with the provisions of ASC Topic 820, we incorporate credit valuation
adjustments to appropriately reflect both our own nonperformance risk and the respective
counterpartys nonperformance risk in the fair value measurements. In adjusting the fair value of
our derivative contracts for the effect of nonperformance risk, we have considered the impact of
netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual
puts and guarantees.

Although we have determined that the majority of the inputs used to value our interest
rate swaps fall within Level 2 of the fair value hierarchy, the credit valuation adjustments
associated with this instrument utilize Level 3 inputs, such as estimates of current credit
spreads, to evaluate the likelihood of default by us and our counterparty. However, as of June 30,
2011, we have assessed the significance of the impact of the credit valuation adjustments on the
overall valuation of our derivative position and have determined that the credit valuation
adjustments are not significant to the overall valuation of our interest rate swaps. As a result,
we have determined that our interest rate swaps valuation in its entirety is classified in Level 2
of the fair value hierarchy.

Assets and liabilities at fair value

The table below presents our assets and liabilities measured at fair value on a recurring
basis as of June 30, 2011, aggregated by the level in the fair value hierarchy within which those
measurements fall.

Quoted Prices in

Active Markets for

Significant

Identical Assets

Significant Other

Unobservable

and Liabilities

Observable Inputs

Inputs

(Level 1)

(Level 2)

(Level 3)

Total

Liabilities:

Derivative financial instruments

$



$

678,000

$



$

678,000

Total liabilities at fair value

$



$

678,000

$



$

678,000

The table below presents our assets and liabilities measured at fair value on a recurring
basis as of December 31, 2010, aggregated by the level in the fair value hierarchy within which
those measurements fall.

Quoted Prices in

Active Markets for

Significant

Identical Assets

Significant Other

Unobservable

and Liabilities

Observable Inputs

Inputs

(Level 1)

(Level 2)

(Level 3)

Total

Liabilities:

Derivative financial instruments

$



$

453,000

$



$

453,000

Total liabilities at fair value

$



$

453,000

$



$

453,000

Financial Instruments Disclosed at Fair Value

ASC Topic 825, Financial Instruments, requires disclosure of the fair value of financial
instruments, whether or not recognized on the face of the balance sheet. Fair value is defined
under ASC Topic 820.

We consider the carrying values of cash and cash equivalents, restricted cash, real
estate and escrow deposits, accounts and other receivables, net and accounts payable and accrued
liabilities to approximate the fair value for these financial instruments because of the short period
of time between origination of the instruments and their expected realization. The fair value of
accounts payable due to affiliates is not determinable due to the related party nature of the
accounts payable.

The fair value of the mortgage loans payable and the lines of credit is estimated using a
discounted cash flow analysis using borrowing rates available to us for debt instruments with
similar terms and maturities. As of June 30, 2011 and December 31, 2010, the fair value of the
mortgage loans payable were $83,317,000 and $59,246,000,
respectively, compared to the carrying value of $83,388,000 and $58,331,000, respectively. The
fair value of the lines of credit as of June 30, 2011 and December 31, 2010 were $93,134,000 and
$12,070,000, respectively, compared to the carrying value of $93,139,000 and $11,800,000,
respectively.

14. Business Combinations

2011

For the six months ended June 30, 2011, we completed nine acquisitions comprising 28 buildings
and 988,000 square feet of GLA. The aggregate purchase price was $218,043,000, plus closing costs
and acquisition fees of $10,998,000, $8,275,000 of which is included in acquisition related
expenses in our accompanying condensed consolidated statements of operations and $2,723,000 of
which is capitalized as part of the measurement of the fair value of the tangible and identified
intangible assets and liabilities of the properties and included in our accompanying condensed
consolidated balance sheets. See Note 3, Real Estate Investments, for a listing of the properties
acquired, acquisition dates and the amount of financing initially incurred or assumed in connection
with such acquisitions.

Results of operations for the acquisitions are reflected in our accompanying condensed
consolidated statements of operations for the six months ended June 30, 2011 for the periods
subsequent to the acquisition dates. For the period from the acquisition date through June 30,
2011, we recognized the following amounts of revenues and net income (loss) for the acquisitions:

The following summarizes the fair value of our nine acquisitions at the time of
acquisition. We present separately the three individually significant acquisitions during the six
months ended June 30, 2011, Dixie-Lobo Medical Office Building Portfolio, Milestone Medical Office
Building Portfolio and Philadelphia SNF Portfolio, and aggregate the rest of the acquisitions
during the six months ended June 30, 2011.

Dixie-Lobo

Milestone

Medical Office

Medical Office

Philadelphia SNF

Building Portfolio

Building Portfolio

Portfolio

Other 2011 Acquisitions

Land

$



$

495,000

$

4,747,000

$

4,386,000

Building and improvements

22,192,000

32,744,000

68,418,000

55,580,000

Furniture, fixtures and equipment





1,065,000



In-place leases

1,682,000

2,519,000

6,326,000

5,566,000

Tenant relationships

2,808,000

2,531,000



4,534,000

Leasehold interest

3,449,000

5,301,000



1,521,000

Master lease



580,000



21,000

Above market leases



804,000



408,000

Total assets acquired

30,131,000

44,974,000

80,556,000

72,016,000

Mortgage loans payable, net

(23,320,000

)





(5,516,000

)

Below market leases



(34,000

)



(134,000

)

Other liabilities





(4,056,000

)(1)

(1,500,000)

(2)

Total liabilities assumed

(23,320,000

)

(34,000

)

(4,056,000

)

(7,150,000

)

Net assets acquired

$

6,811,000

$

44,940,000

$

76,500,000

$

64,866,000

(1)

Included in other liabilities is $1,402,000 and $2,500,000 accrued for as contingent
consideration in connection with the purchase of Philadelphia SNF Portfolio. An estimated
$1,402,000 of such amount will be paid upon receipt of notification within six years of the
acquisition date that the tenant has achieved a certain rent coverage ratio for the preceding
12 months. There is no minimum or maximum required payment, however such payment is limited by
the tenants rent coverage ratio and will result in additional rental revenue to us. Up to
$2,500,000 of such contingent consideration will be paid within two years of the acquisition
date upon notification that (i) the tenant has achieved a certain rent coverage ratio for the
three most recent calendar months and (ii) the tenant has completed improvements in an amount
up to $2,500,000. The range of payment is between $0 and up to a maximum of $2,500,000.

(2)

Included in other liabilities is $1,500,000 accrued for as contingent consideration in
connection with the purchase of Yuma Skilled Nursing Facility. Such payment will be made to
the seller upon receipt of notification within three years of the acquisition date that (i) the
tenant has achieved a certain lease coverage ratio for two consecutive calendar quarters and
(ii) that the tenant has completed an estimated $3,500,000 renovation project. If such
notification is not received, no payment will be made. The payment will be either $0 or
$1,500,000.

Assuming the acquisitions in 2011 discussed above had occurred on January 1, 2010, for the
three and six months ended June 30, 2011 and 2010, pro forma revenues, net income (loss), net
income (loss) attributable to controlling interest and net income (loss) per common share
attributable to controlling interest  basic and diluted would have been as follows:

Three Months Ended

Six Months Ended

June 30,

June 30,

2011

2010

2011

2010

Revenues

$

11,677,000

$

7,040,000

$

23,275,000

$

12,963,000

Net income (loss)

$

1,504,000

$

(285,000

)

$

3,573,000

$

569,000

Net income (loss) attributable to controlling interest

$

1,504,000

$

(285,000

)

$

3,572,000

$

569,000

Net income (loss) per common share
attributable to controlling interest  basic and diluted

$

0.04

$

(0.02

)

$

0.10

$

0.03

The pro forma adjustments assume that the debt proceeds and the offering proceeds, at a price
of $10.00 per share, net of offering costs were raised as of January 1, 2010. In addition, as
acquisition related expenses related to the acquisitions are not expected to have a continuing
impact, they have been excluded from the pro forma results. The pro forma results are not
necessarily indicative of the operating results that would have been obtained had the acquisitions
occurred at the beginning of the periods presented, nor are they necessarily indicative of future
operating results.

For the six months ended June 30, 2010, we completed seven acquisitions comprising nine
buildings and 315,000 square feet of GLA. The aggregate purchase price was $60,220,000, plus
closing costs and acquisition fees
of $2,047,000, which are included in acquisition related expenses in our accompanying
condensed consolidated statements of operations. See Note 3, Real Estate Investments, for a listing
of the properties acquired, the acquisition dates and the amount of financing initially incurred or
assumed in connection with such acquisitions.

Results of operations for the acquisitions are reflected in our accompanying condensed
consolidated statements of operations for the six months ended June 30, 2010 for the periods
subsequent to the acquisition dates. For the period from the acquisition date through June 30,
2010, we recognized the following amounts of revenues and net loss for the acquisitions:

Property

Revenues

Net Loss

Lacombe Medical Office Building

$

262,000

$

(201,000

)

Center for Neurosurgery and Spine

$

208,000

$

(454,000

)

Parkway Medical Center

$

391,000

$

(383,000

)

Highlands Ranch Medical Pavilion

$

205,000

$

(326,000

)

Muskogee Long-Term Acute Care Hospital

$

105,000

$

(295,000

)

St. Vincent Medical Office Building

$

25,000

$

(311,000

)

Livingston Medical Arts Pavilion

$

7,000

$

(202,000

)

The fair value of our seven acquisitions at the time of acquisition is shown below:

Lacombe Medical Office

Center for

Parkway Medical

Highlands Ranch

Muskogee Long-Term

St. Vincent Medical

Livingston Medical

Building

Neurosurgery and Spine

Center

Medical Pavilion

Acute Care Hospital

Office Building

Arts Pavilion

Land

$

409,000

$

319,000

$

1,320,000

$

1,234,000

$

379,000

$

1,568,000

$



Building and improvements

5,438,000

4,689,000

7,192,000

5,444,000

8,314,000

6,746,000

4,976,000

In-place leases

512,000

575,000

969,000

668,000

897,000

741,000

519,000

Tenant relationships

458,000

585,000

1,318,000

999,000

1,395,000

964,000

312,000

Leasehold interest













149,000

Above market leases



327,000

97,000

27,000



106,000

473,000

Total assets acquired

6,817,000

6,495,000

10,896,000

8,372,000

10,985,000

10,125,000

6,429,000

Mortgage loan payables, net



(3,025,000

)



(4,414,000

)







Below market leases





(41,000

)





(50,000

)

(80,000

)

Derivative financial instrument



(310,000

)











Total liabilities assumed



(3,335,000

)

(41,000

)

(4,414,000

)



(50,000

)

(80,000

)

Net assets acquired

$

6,817,000

$

3,160,000

$

10,855,000

$

3,958,000

$

10,985,000

$

10,075,000

$

6,349,000

Assuming the acquisitions in 2010 discussed above had occurred on January 1, 2010, for the
three and six months ended June 30, 2010, pro forma revenues, net loss, net loss attributable to
controlling interest and net loss per common share attributable to controlling interest  basic
and diluted would have been as follows:

Three Months Ended

Six Months Ended

June 30, 2010

June 30, 2010

Revenues

$

2,024,000

$

4,023,000

Net loss

$

(317,000

)

$

(2,603,000

)

Net loss attributable to controlling interest

$

(317,000

)

$

(2,603,000

)

Net loss per common share
attributable to controlling interest  basic and diluted

The pro forma adjustments assume that the debt proceeds and the offering proceeds, at a price
of $10.00 per share, net of offering costs were raised as of January 1, 2010. In addition, as
acquisition related expenses related to the acquisitions are not expected to have a continuing
impact, they have been excluded from the pro forma results. The pro forma results are not
necessarily indicative of the operating results that would have been obtained had the acquisitions
occurred at the beginning of the periods presented, nor are they necessarily indicative of future
operating results.

15. Segment Reporting

As of June 30, 2011, we evaluated our business and made resource allocations based on three
business segments  medical office buildings, hospitals and skilled nursing facilities. Our
medical office buildings are typically leased to multiple tenants under separate leases in each
building, thus requiring active management and responsibility for many of the associated operating
expenses (although many of these are, or can effectively be, passed through to the tenants). Our
hospital investments are primarily single tenant properties which lease the facilities to
unaffiliated tenants under triple-net and generally master leases that transfer the obligation
for all facility operating costs (including maintenance, repairs, taxes, insurance and capital
expenditures) to the tenant. Our skilled nursing facilities are acquired and similarly structured
as our hospital investments. The accounting policies of these segments are the same as those
described in Note 2, Summary of Significant Accounting Policies, and Note 2, Summary of Significant
Accounting Policies, to the Consolidated Financial Statements in our 2010 Annual Report on Form
10-K, as filed with the SEC on March 10, 2011. There are no intersegment sales or transfers.

We evaluate performance based upon net operating income of the combined properties in each
segment. We define net operating income, a non-GAAP financial measure, as total revenues, less
rental expenses, which excludes depreciation and amortization, general and administrative expenses,
acquisition related expenses, interest expense and interest income. We believe that net income
(loss), as defined by GAAP, is the most appropriate earnings measurement. However, we believe that
segment profit serves as a useful supplement to net income (loss) because it allows investors and
our management to measure unlevered property-level operating results and to compare our operating
results to the operating results of other real estate companies and between periods on a consistent
basis. Segment profit should not be considered as an alternative to net income (loss) determined in
accordance with GAAP as an indicator of our financial performance, and, accordingly, we believe
that in order to facilitate a clear understanding of our consolidated historical operating results,
segment profit should be examined in conjunction with net income (loss) as presented in our
Consolidated Financial Statements and data included elsewhere in this Quarterly Report on Form
10-Q.

Interest expense, depreciation and amortization and other expenses not attributable to
individual properties are not allocated to individual segments for purposes of assessing segment
performance.

Assets by reportable segments as of June 30, 2011 and December 31, 2010 are as follows:

June 30, 2011

December 31, 2010

Medical office buildings

$

206,410,000

$

97,157,000

Hospitals

65,466,000

53,313,000

Skilled nursing facilities

152,731,000

47,610,000

All other

8,948,000

5,916,000

Total assets

$

433,555,000

$

203,996,000

16. Concentration of Credit Risk

Financial instruments that potentially subject us to a concentration of credit risk are
primarily cash and cash equivalents, escrow deposits, restricted cash and accounts and other
receivables. Cash is generally invested in investment-grade, short-term instruments with a maturity
of three months or less when purchased. We have cash in financial institutions that is insured by
the Federal Deposit Insurance Corporation, or FDIC. As of June 30, 2011 and December 31, 2010, we
had cash and cash equivalents, escrow deposits and restricted cash accounts in excess of FDIC
insured limits. We believe this risk is not significant. Concentration of credit risk with respect
to accounts receivable from tenants is limited. We perform credit evaluations of prospective
tenants, and security deposits are obtained upon lease execution.

Based on leases in effect as of June 30, 2011, we owned properties in three states for which
each state accounted for 10.0% or more of our annualized base rent. Pennsylvania accounted for
19.7% of annualized base rent, Texas accounted for 12.5% of annualized base rent and Virginia
accounted for 11.4% of annualized base rent. Accordingly, there is a geographic concentration of
risk subject to fluctuations in each states economy.

Based on leases in effect as of June 30, 2011, our three reportable business segments, medical
office buildings, hospitals and skilled nursing facilities, accounted for 47.2%, 15.5% and 37.3%,
respectively, of annualized base rent. As of June 30, 2011, one of our tenants at our consolidated
properties accounted for 10.0% or more of our annualized base rent, as follows:

Percentage of

GLA

Lease

2011 Annual Base

2011 Annual

(Square

Expiration

Tenant

Rent(1)

Base Rent

Property

Feet)

Date

PA Holdings  SNF, L.P.

$

7,516,000

19.7

%

Philadelphia SNF Portfolio

392,000

06/30/26

(1)

Annualized base rent is based on contractual base rent from leases in effect as of June 30,
2011. The loss of this tenant or their inability to pay rent could have a material adverse
effect on our business and results of operations.

17. Per Share Data

We report earnings (loss) per share pursuant to ASC Topic 260, Earnings per Share. Basic
earnings (loss) per share attributable for all periods presented are computed by dividing net
income (loss) attributable to controlling interest by the weighted average number of shares of our
common stock outstanding during the period. Diluted earnings (loss) per share are computed based on
the weighted average number of shares of our common stock and all potentially dilutive securities,
if any. Nonvested shares of our restricted common stock give rise to potentially dilutive shares of
our common stock. As of June 30, 2011 and 2010, there were 19,500 shares and 18,000 shares,
respectively, of nonvested shares of our restricted common stock outstanding, but such shares were
excluded from the computation of diluted earnings per share because such shares were anti-dilutive
during these periods.

As of July 31, 2011, we had received and accepted subscriptions in our offering for 32,212,023
shares of our common stock, or $321,454,000, excluding shares of our common stock issued pursuant
to the DRIP.

Share Repurchases

In July 2011, we repurchased 23,377 shares of our common stock, for an aggregate amount of
$217,000, under our share repurchase plan.

Acquisitions

Subsequent to June 30, 2011, we completed one acquisition comprised of one building and 41,000
square feet of GLA from an unaffiliated party. The purchase price of this property was
$7,200,000 and we paid $198,000 in acquisition fees to our advisor or its affiliates in connection
with this acquisition. We have not yet measured the fair value of the tangible and identified
intangible assets and liabilities of the property. The following is a summary of our acquisition
subsequent to June 30, 2011:

Acquisition Fee

Ownership

Purchase

Mortgage Loan

to our Advisor

Property

Location

Type

Date Acquired

Percentage

Price

Payable(1)

or its Affiliates(2)

Maxfield Medical
Office Building

Sarasota, FL

Medical Office

07/11/11

100

%

$

7,200,000

$

5,119,000

$

198,000

(1)

Represents the balance of the mortgage loan payable assumed by us at the time of acquisition.

(2)

Our advisor or its affiliates were paid, as compensation for services rendered in connection
with the investigation, selection and acquisition of our properties, an acquisition fee of
2.75% of the contract purchase price for the property acquired.

Managements Discussion and Analysis of Financial Condition and Results of Operations.

The use of the words we, us or our refers to Grubb & Ellis Healthcare REIT II, Inc. and
its subsidiaries, including Grubb & Ellis Healthcare REIT II Holdings, LP, except where the context
otherwise requires.

The following discussion should be read in conjunction with our accompanying condensed
consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on
Form 10-Q. Such condensed consolidated financial statements and information have been prepared to
reflect our financial position as of June 30, 2011 and December 31, 2010, together with our results
of operations for the three months ended June 30, 2011 and 2010, and for the six months ended June
30, 2011 and 2010 and cash flows for the six months ended June 30, 2011 and 2010.

Forward-Looking Statements

Historical results and trends should not be taken as indicative of future operations. Our
statements contained in this report that are not historical facts are forward-looking statements.
Actual results may
differ materially from those included in the forward-looking statements. Forward-looking
statements, which are based on certain assumptions and describe future plans, strategies and
expectations, are generally identifiable by use of the words expect, project, may, will,
should, could, would, intend, plan, anticipate, estimate, believe, continue,
predict, potential or the negative of such terms and other comparable terminology. Our ability
to predict results or the actual effect of future plans or strategies is inherently uncertain.
Factors which could have a material adverse effect on our operations and future prospects on a
consolidated basis include, but are not limited to: changes in economic conditions generally and
the real estate market specifically; legislative and regulatory changes, including changes to laws
governing the taxation of real estate investment trusts, or REITs; the availability of capital;
changes in interest rates; competition in the real estate industry; the supply and demand for
operating properties in our proposed market areas; changes in accounting principles generally
accepted in the United States of America, or GAAP, policies and guidelines applicable to REITs; the
success of our best efforts initial public offering; the availability of properties to acquire; the
availability of financing; and our ongoing relationship with Grubb & Ellis Company, or Grubb &
Ellis, or our sponsor, and its affiliates. These risks and uncertainties should be considered in
evaluating forward-looking statements and undue reliance should not be placed on such statements.
Additional information concerning us and our business, including additional factors that could
materially affect our financial results, is included herein and in our other filings with the
United States Securities and Exchange Commission, or the SEC.

Overview and Background

Grubb & Ellis Healthcare REIT II, Inc., a Maryland corporation, was incorporated on January 7,
2009 and therefore we consider that our date of inception. We were initially capitalized on
February 4, 2009. We invest and intend to continue to invest in a diversified portfolio of real
estate properties, focusing primarily on medical office buildings and healthcare-related
facilities. We may also originate and acquire secured loans and other real estate-related
investments. We generally seek investments that produce current income. We intend to qualify and
elect to be treated as a REIT under the Internal Revenue Code of 1986, as amended, or the Code, for
federal income tax purposes for our taxable year ended December 31, 2010.

We are conducting a best efforts initial public offering, or our offering, in which we are
offering to the public up to 300,000,000 shares of our common stock for $10.00 per share in our
primary offering and 30,000,000 shares of our common stock pursuant to our distribution
reinvestment plan, or the DRIP, for $9.50 per share, for a maximum offering of up to
$3,285,000,000. The SEC declared our registration statement effective as of August 24, 2009. We
will sell shares of our common stock in our offering until August 24, 2012, unless extended by our
board of directors as permitted under applicable law, or extended with respect to shares of our
common stock offered pursuant to the DRIP. We reserve the right to reallocate the shares of our
common stock we are offering between the primary offering and the DRIP. As of June 30, 2011, we had
received and accepted subscriptions in our offering for
29,270,824 shares of our common stock, or $292,093,000, excluding shares of our common stock
issued pursuant to the DRIP.

We conduct substantially all of our operations through Grubb & Ellis Healthcare REIT II
Holdings, LP, or our operating partnership. We are externally advised by Grubb & Ellis Healthcare
REIT II Advisor, LLC, or our advisor, pursuant to an advisory agreement, or the Advisory Agreement,
between us and our advisor that has a one-year term that expires on June 1, 2012 and is subject to
successive one-year renewals upon the mutual consent of the parties. Our advisor supervises and
manages our day-to-day operations and selects the properties and real estate-related investments we
acquire, subject to the oversight and approval of our board of directors. Our advisor also provides
marketing, sales and client services on our behalf. Our advisor engages affiliated entities to
provide various services to us. Our advisor is managed by, and is a wholly owned subsidiary of,
Grubb & Ellis Equity Advisors, LLC, or Grubb & Ellis Equity Advisors, which is a wholly owned
subsidiary of our sponsor.

We currently operate through three reportable business segments  medical office buildings,
hospitals and skilled nursing facilities. As of June 30, 2011, we had completed 22 acquisitions
comprising 53 buildings and approximately 1,861,000 square feet of gross leasable area, or GLA, for
an aggregate purchase price of $411,485,000.

Critical Accounting Policies

The complete listing of our Critical Accounting Policies was previously disclosed in our 2010
Annual Report on Form 10-K, as filed with the SEC on March 10, 2011, and there have been no
material changes to our Critical Accounting Policies as disclosed therein.

Interim Unaudited Financial Data

Our accompanying condensed consolidated financial statements have been prepared by us in
accordance with GAAP in conjunction with the rules and regulations of the SEC. Certain information
and footnote disclosures required for annual financial statements have been condensed or excluded
pursuant to SEC rules and regulations. Accordingly, our accompanying condensed consolidated
financial statements do not include all of the information and footnotes required by GAAP for
complete financial statements. Our accompanying condensed consolidated financial statements reflect
all adjustments, which are, in our view, of a normal recurring nature and necessary for a fair
presentation of our financial position, results of operations and cash flows for the interim
period. Interim results of operations are not necessarily indicative of the results to be expected
for the full year; such full year results may be less favorable. Our accompanying condensed
consolidated financial statements should be read in conjunction with the audited consolidated
financial statements and the notes thereto included in our 2010 Annual Report on Form 10-K, as
filed with the SEC on March 10, 2011.

For a discussion of our acquisitions for the six months ended June 30, 2011 and 2010, see Note
3, Real Estate Investments, to our accompanying condensed consolidated financial statements. For a
discussion of our acquisitions subsequent to June 30, 2011, see Note 18, Subsequent Events 
Acquisitions, to our accompanying condensed consolidated financial statements.

Factors Which May Influence Results of Operations

We are not aware of any material trends or uncertainties, other than national economic
conditions affecting real estate generally, that may reasonably be expected to have a material
impact, favorable or unfavorable, on revenues or income from the acquisition, management and
operation of properties other than those listed in Part II,
Item 1A. Risk Factors, of this Quarterly Report on Form 10-Q and those Risk Factors previously
disclosed in our 2010 Annual Report on Form 10-K, as filed with the SEC on March 10, 2011.

The amount of rental income generated by our properties depends principally on our
ability to maintain the occupancy rates of currently leased space and to lease currently available
space and space available from lease terminations at the then existing rental rates. Negative
trends in one or more of these factors could adversely affect our rental income in future periods.

Offering Proceeds

If we fail to raise substantially more proceeds from the sale of shares of our common stock in
our offering than the amount we have raised to date, we will have limited diversification in terms
of the number of investments owned, the geographic regions in which our investments are located and
the types of investments that we make. As a result, our real estate portfolio would be concentrated
in a small number of properties, which would increase exposure to local and regional economic
downturns and the poor performance of one or more of our properties, whereby our stockholders would
be exposed to increased risk. In addition, many of our expenses are fixed regardless of the size of
our real estate portfolio. Therefore, depending on the amount of proceeds we raise from our
offering, we would expend a larger portion of our income on operating expenses. This would reduce
our profitability and, in turn, the amount of net income available for distribution to our
stockholders.

Scheduled Lease Expirations

As of June 30, 2011, our consolidated properties were 96.9% leased. During the remainder of
2011, leases associated with 2.1% of the leased GLA will expire. Our leasing strategy for 2011
focuses on negotiating renewals for leases scheduled to expire during the remainder of the year. In
the future, if we are unable to negotiate renewals, we will try to identify new tenants or
collaborate with existing tenants who are seeking additional space to occupy.

As of June 30, 2011, our remaining weighted average lease term is 10.2 years.

Sarbanes-Oxley Act

The Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act, and related laws,
regulations and standards relating to corporate governance and disclosure requirements applicable
to public companies have increased the costs of compliance with corporate governance, reporting and
disclosure practices. These costs may have a material adverse effect on our results of operations
and could impact our ability to pay distributions at current rates to our stockholders.
Furthermore, we expect that these costs will increase in the future due to our continuing
implementation of compliance programs mandated by these requirements. Any increased costs may
affect our ability to distribute funds to our stockholders. As part of our compliance with the
Sarbanes-Oxley Act, we have provided managements assessment of our internal control over financial
reporting as of December 31, 2010 and will continue to comply with such regulations.

In addition, these laws, rules and regulations create new legal bases for potential
administrative enforcement, civil and criminal proceedings against us in the event of
non-compliance, thereby increasing the risks of liability and potential sanctions against us. We
expect that our efforts to comply with these laws and regulations will continue to involve
significant and potentially increasing costs, and that our failure to comply with these laws could
result in fees, fines, penalties or administrative remedies against us.

Our operating results are primarily comprised of income derived from our portfolio of
properties.

We expect all amounts to increase in the future based on a full year of operations as well as
increased activity as we acquire additional real estate investments. Our results of operations are
not indicative of those expected in future periods.

As of June 30, 2011, we operate through three reportable business segments  medical office
buildings, hospitals and skilled nursing facilities. With the continued expansion of our portfolio,
we believe segregation of our operations into three reporting segments would be useful in assessing
the performance of our business in the same way that management intends to review our performance
and make operating decisions. Prior to 2011, we operated through one reportable segment.

Except where otherwise noted, the change in our results of operations is primarily due to our
22 acquisitions as of June 30, 2011, as compared to our seven acquisitions as of June 30, 2010. As
of June 30, 2011 and 2010, we owned the following types of properties:

As of June 30,

2011

2010

Number of

Aggregate

Leased

Number of

Aggregate

Leased

Acquisitions

Purchase Price

%

Acquisitions

Purchase Price

%

Medical office buildings

15

$

201,690,000

94.1

%

6

$

49,220,000

95.1

%

Hospitals

3

65,795,000

100

%

1

11,000,000

100

%

Skilled nursing facilities

4

144,000,000

100

%







%

Total/Weighted Average

22

$

411,485,000

96.9

%

7

$

60,220,000

95.7

%

Rental Income

For the three months ended June 30, 2011 and 2010, rental income was $8,675,000 and
$1,142,000, respectively, and was primarily comprised of base rent of $6,767,000 and $840,000,
respectively, and expense recoveries of $1,334,000 and $241,000, respectively. For the six months
ended June 30, 2011 and 2010, rental income was $14,682,000 and $1,203,000, respectively, and was
primarily comprised of base rent of $11,528,000 and $875,000, respectively, and expense recoveries
of $2,132,000 and $256,000, respectively.

Rental income by operating segment consisted of the following for the periods then ended:

For the three months ended June 30, 2011 and 2010, rental expenses were $1,817,000 and
$390,000, respectively. For the six months ended June 30, 2011 and 2010, rental expenses were
$3,020,000 and $407,000, respectively. Rental expenses consisted of the following for the periods
then ended:

Three Months Ended

Six Months Ended

June 30,

June 30,

2011

2010

2011

2010

Real estate taxes

$

795,000

$

151,000

$

1,285,000

$

162,000

Building maintenance

350,000

101,000

619,000

103,000

Utilities

283,000

75,000

479,000

76,000

Property management fees

193,000

42,000

313,000

44,000

Administration

75,000

10,000

139,000

10,000

Insurance

44,000

8,000

65,000

8,000

Other

77,000

3,000

120,000

4,000

Total

$

1,817,000

$

390,000

$

3,020,000

$

407,000

Rental expenses and rental expenses as a percentage of revenue by operating segment consisted
of the following for the periods then ended:

Three Months Ended

Six Months Ended

June 30,

June 30,

2011

2010

2011

2010

Medical office buildings

$

1,546,000

30.8

%

$

380,000

36.6

%

$

2,546,000

31.3

%

$

397,000

36.2

%

Hospitals

147,000

8.0

%

10,000

9.5

%

283,000

8.0

%

10,000

9.5

%

Skilled nursing facilities

124,000

6.8

%





%

191,000

6.4

%





%

Total/weighted average

$

1,817,000

20.9

%

$

390,000

34.2

%

$

3,020,000

20.6

%

$

407,000

33.8

%

Overall, as compared to 2010, the percentage of rental expenses as a percentage of
revenue in 2011 is lower as our portfolio contains more hospitals and skilled nursing facilities,
which typically have a lower expense to revenue ratio than medical office buildings.

General and Administrative

For the three months ended June 30, 2011 and 2010, general and administrative was $1,458,000
and $360,000, respectively. For the six months ended June 30, 2011 and 2010, general and
administrative was $2,379,000 and $545,000, respectively. General and administrative consisted of
the following for the periods then ended:

Three Months Ended

Six Months Ended

June 30,

June 30,

2011

2010

2011

2010

Asset management fees

$

656,000

$

80,000

$

1,096,000

$

85,000

Professional and legal fees

252,000

104,000

463,000

168,000

Bad debt expense

231,000



245,000



Board of directors fees

73,000

37,000

133,000

79,000

Transfer agent services

80,000

29,000

129,000

43,000

Directors and officers liability
insurance

44,000

45,000

88,000

89,000

Franchise taxes

18,000



73,000

2,000

Postage & delivery

48,000

26,000

59,000

28,000

Bank charges

23,000

7,000

41,000

8,000

Restricted stock compensation

27,000

23,000

38,000

31,000

Other

6,000

9,000

14,000

12,000

Total

$

1,458,000

$

360,000

$

2,379,000

$

545,000

The increase in general and administrative is primarily the result of purchasing properties in
2011 and 2010 and thus incurring asset management fees, as well as incurring higher professional
and legal fees as a result of our increase in assets.

For the three months ended June 30, 2011 and 2010, depreciation and amortization was
$3,274,000 and $536,000, respectively, and consisted primarily of depreciation on our operating
properties of $2,124,000 and $271,000, respectively, and amortization on our identified intangible
assets of $1,143,000 and $265,000, respectively. For the six months ended June 30, 2011 and 2010,
depreciation and amortization was $5,476,000 and $565,000, respectively, and consisted primarily of
depreciation on our operating properties of $3,568,000 and $287,000, respectively, and amortization
on our identified intangible assets of $1,899,000 and $278,000, respectively.

Interest Expense

For the three months ended June 30, 2011 and 2010, interest expense, including loss in fair
value of derivative financial instruments, was $1,772,000 and $228,000, respectively. For the six
months ended June 30, 2011 and 2010, interest expense including loss in fair value of derivative
financial instruments was $2,793,000 and $229,000, respectively. Interest expense consisted of the
following for the periods then ended:

For the three months ended June 30, 2011 and 2010, we had interest income of $2,000 and
$8,000, respectively, and for the six months ended June 30, 2011 and 2010, we had interest income
of $6,000 and $13,000, respectively, related to interest earned on funds held in cash accounts.

Liquidity and Capital Resources

We are dependent upon the net proceeds from our offering to provide the capital required
to acquire real estate and real estate-related investments, net of any indebtedness that we may
incur. Our ability to raise funds through our offering is dependent on general economic conditions,
general market conditions for REITs and our operating performance. The capital required to purchase
real estate and real estate-related investments is obtained primarily from our offering and from
any indebtedness that we may incur.

We expect to experience a relative increase in liquidity as additional subscriptions for
shares of our common stock are received and a relative decrease in liquidity as net offering
proceeds are expended in connection with the acquisition, management and operation of our real
estate and real estate-related investments.

Our sources of funds will primarily be the net proceeds of our offering, operating cash flows
and borrowings. We believe that these cash resources will be sufficient to satisfy our cash
requirements for the foreseeable future, and we do not anticipate a need to raise funds from other
than these sources within the next 12 months.

Our principal demands for funds are for acquisitions of real estate and real estate-related
investments, to pay operating expenses and interest on our current and future indebtedness and to
pay distributions to our stockholders. We estimate that we will require approximately $3,971,000 to
pay interest on our outstanding indebtedness in the remaining six months of 2011, based on rates in
effect as of June 30, 2011. In addition, we estimate that we will require $26,850,000 to pay
principal on our outstanding indebtedness in the remaining six months of 2011. In addition, we
require resources to make certain payments to our advisor and its affiliates, which during our
offering includes payments for reimbursement of other organizational and offering expenses, selling
commissions and dealer manager fees.

Generally, cash needs for items other than acquisitions of real estate and real estate-related
investments are met from operations, borrowings and the net proceeds of our offering. However,
there may be a delay between the sale of shares of our common stock and our investments in real
estate and real estate-related investments, which could result in a delay in the benefits to our
stockholders, if any, of returns generated from our investment operations.

Our advisor evaluates potential additional investments and engages in negotiations with
real estate sellers, developers, brokers, investment managers, lenders and others on our behalf.
Until we invest the majority of the net proceeds of our offering in real estate and real
estate-related investments, we may invest in short-term, highly liquid or other authorized
investments. Such short-term investments will not earn significant returns, and we cannot predict
how long it will take to fully invest the proceeds from our offering in real estate and real
estate-related investments. The number of properties we may acquire and other investments we will
make will depend upon the number of shares of our common stock sold in our offering and the
resulting amount of net proceeds available for investment.

When we acquire a property, our advisor prepares a capital plan that contemplates the
estimated capital needs of that investment. In addition to operating expenses, capital needs may
also include costs of refurbishment, tenant improvements or other major capital expenditures. The
capital plan also sets forth the anticipated sources of the necessary capital, which may include a
line of credit or other loans established with respect to the investment, operating cash generated
by the investment, additional equity investments from us or joint venture partners or, when
necessary, capital reserves. Any capital reserve would be established from the net proceeds of our
offering, proceeds from sales of other investments, operating cash generated by other investments
or other cash on hand. In some cases, a lender may require us to establish capital reserves for a
particular investment. The capital plan for each investment will be adjusted through ongoing,
regular reviews of our portfolio or as necessary to respond to unanticipated additional capital
needs.

In the event that there is a shortfall in net cash available due to various factors,
including, without limitation, the timing of distributions or the timing of the collection of
receivables, we may seek to obtain capital to pay distributions by means of secured or unsecured
debt financing through one or more third parties, or our advisor or its affiliates. There are
currently no limits or restrictions on the use of proceeds from our advisor or its affiliates which
would prohibit us from making the proceeds available for distribution. We may also pay
distributions from cash from capital transactions, including, without limitation, the sale of one
or more of our properties.

Based on the properties owned as of June 30, 2011, we estimate that our expenditures for
capital improvements and tenant improvements will require up to $1,902,000 for the remaining six
months of 2011. As of June 30, 2011, we had $2,561,000 of restricted cash in loan impounds and
reserve accounts for such capital expenditures. We cannot provide assurance, however, that we will
not exceed these estimated expenditure and distribution levels or be able to obtain additional
sources of financing on commercially favorable terms or at all.

If we experience lower occupancy levels, reduced rental rates, reduced revenues as a result of
asset sales, or increased capital expenditures and leasing costs compared to historical levels due
to competitive market conditions for new and renewal leases, the effect would be a reduction of net
cash provided by operating activities. If such a reduction of net cash provided by operating
activities is realized, we may have a cash flow deficit in subsequent periods. Our estimate of net
cash available is based on various assumptions which are difficult to predict, including the levels
of leasing activity and related leasing costs. Any changes in these assumptions could impact our
financial results and our ability to fund working capital and unanticipated cash needs.

Cash Flows

Cash flows used in operating activities for the six months ended June 30, 2011 and 2010, were
$892,000 and $1,603,000, respectively. For the six months ended June 30, 2011, cash flows used in
operating activities primarily related to the payment of acquisition related expenses and general
and administrative expenses, partially offset by the cash flows provided by our acquisitions. For
the six months ended June 30, 2010, cash flows used in operating activities primarily related to
the payment of acquisition related expenses and general and administrative expenses. We anticipate
cash flows from operating activities to increase as we purchase additional properties.

Cash flows used in investing activities for the six months ended June 30, 2011 and 2010, were
$192,922,000 and $52,224,000, respectively. For the six months ended June 30, 2011, cash flows used
in investing activities related primarily to the acquisition of our properties in the amount of
$192,366,000 and capital expenditures of $1,192,000, offset by a decrease in real estate and escrow
deposits for the purchase of real estate in the amount of $499,000. For the six months ended June
30, 2010, cash flows used in investing activities related primarily to the acquisition of our
properties in the amount of $51,552,000 and the payment of $500,000 in real estate and escrow
deposits. We anticipate cash flows used in investing activities to increase as we purchase
additional properties.

Cash flows provided by financing activities for the six months ended June 30, 2011 and 2010,
were $196,720,000 and $48,928,000, respectively. For the six months ended June 30, 2011, such cash
flows related primarily to funds raised from investors in our offering in the amount of
$140,231,000, principal payments on our mortgage loans payable in the amount of $31,466,000, net
borrowings under our secured revolving credit facilities with Bank of America, N.A. and KeyBank
National Association, or the lines of credit, in the amount of $81,339,000, partially offset by the
payment of offering costs of $15,093,000 and distributions of $3,214,000. Additional cash outflows
related to deferred financing costs of $2,308,000 in connection with the debt financing for our
acquisitions. For a further discussion of our lines of credit, see Note 8, Lines of Credit, to our
accompanying condensed consolidated financial statements. Of the $31,466,000 in payments on our
mortgage loans payable, $7,500,000 reflects the early extinguishment of a mortgage loan payable on
Surgical Hospital of Humble using excess cash on hand and $17,039,000 reflects an early payment
made on a $26,810,000 bridge loan on Virginia Skilled Nursing Facility Portfolio using borrowings
from our line of credit with KeyBank National Association. For the six months ended June 30, 2010,
such cash flows related primarily to funds raised from investors in our offering in the amount of
$55,475,000, partially offset by the payment of offering costs of $6,159,000. We anticipate cash
flows from financing activities to increase in the future as we raise additional funds from
investors and incur debt to purchase properties.

Our board of directors authorized a daily distribution to our stockholders of record as of the
close of business on each day of the period commencing on January 1, 2010 and ending on June 30,
2010, as a result of our sponsor advising us that it intended to fund these
distributions until we acquired our first property. We acquired our first property, Lacombe Medical
Office Building, on March 5, 2010. Our sponsor did not receive any additional shares of our common
stock or other consideration for funding these distributions, and we will not repay the funds
provided by our sponsor for these distributions. Our sponsor is not obligated to contribute monies
to fund any subsequent distributions. Subsequently, our board of directors authorized, on a
quarterly basis, a daily distribution to our stockholders of record as of the close of business on
each day of the quarterly periods commencing on July 1, 2010 and ending on September 30, 2011.

The distributions are calculated based on 365 days in the calendar year and are equal to
$0.0017808 per day per share of common stock, which is equal to an annualized distribution rate of
6.5%, assuming a purchase price of $10.00 per share. These distributions are aggregated and paid in
cash or shares of our common stock pursuant to the DRIP shares monthly in arrears.

The amount of the distributions to our stockholders is determined quarterly by our board of
directors and is
dependent on a number of factors, including funds available for payment of distributions, our
financial condition,
capital expenditure requirements and annual distribution requirements needed to qualify as a REIT
under the Code. We have not established any limit on the amount of offering proceeds that may be
used to fund distributions, except that, in accordance with our organizational documents and
Maryland law, we may not make distributions that would: (i) cause us to be unable to pay our debts
as they become due in the usual course of business; (ii) cause our total assets to be less than the
sum of our total liabilities plus senior liquidation preferences; or (iii) jeopardize our ability
to qualify or maintain our qualification as a REIT.

For the six months ended June 30, 2011, we paid distributions of $6,335,000 ($3,214,000 in
cash and $3,121,000 in shares of our common stock pursuant to the DRIP). None of the distributions
were paid from cash flows from operations of $(892,000) and $6,335,000, or 100%, of the
distributions were paid from our offering proceeds. For the six months ended June 30, 2010, we paid
distributions of $979,000 ($477,000 in cash and $502,000 in shares of our common stock pursuant to
the DRIP), none of which were paid from cash flows from operations of $(1,603,000). $259,000, or
26.5%, of the distributions were paid using funds from our sponsor. The distributions in excess of
funds from our sponsor were paid from offering proceeds. Under GAAP, acquisition related expenses
are expensed, and therefore, subtracted from cash flows from operations. However, these expenses
are paid from offering proceeds.

Our distributions of amounts in excess of our current and accumulated earnings and profits
have resulted in a return of capital to our stockholders. We have not established any limit on the
amount of offering proceeds that may be used to fund distributions other than those limits imposed
by our organizational documents and Maryland law. Therefore, all or any portion of a distribution
to our stockholders may be paid from offering proceeds. The payment of distributions from our
offering proceeds could reduce the amount of capital we ultimately invest in assets and negatively
impact the amount of income available for future distributions.

As of June 30, 2011, we had an amount payable of $495,000 to our advisor or its affiliates for
lease commissions, asset and property management fees, operating expenses, on-site personnel
payroll and acquisition related expenses, which will be paid from cash flows from operations in the
future as they become due and payable by us in the ordinary course of business consistent with our
past practice.

As of June 30, 2011, no amounts due to our advisor or its affiliates have been deferred,
waived or forgiven. Our advisor and its affiliates have no obligations to defer, waive or forgive
amounts due to them. In the future, if our advisor or its affiliates do not defer, waive or forgive
amounts due to them, this would negatively affect our cash flows from operations, which could
result in us paying distributions, or a portion thereof, with net proceeds from our offering, funds
from our sponsor or borrowed funds. As a result, the amount of proceeds available for investment
and operations would be reduced, or we may incur additional interest expense as a result of
borrowed funds.

For the six months ended June 30, 2011 and 2010, our funds from operations, or FFO, were
$(2,295,000) and $(2,297,000), respectively. For the six months ended June 30, 2011, we paid
distributions of $6,335,000, or 100%, from proceeds from our offering. For the six months ended June
30, 2010, we paid distributions of $259,000, or 26.5%, using funds from our sponsor and $720,000,
or 73.5%, from proceeds from our offering. The payment of distributions from sources other than FFO
may reduce the amount of proceeds available for investment and operations or cause us to incur
additional interest expense as a result of borrowed funds. For a further discussion of FFO,
including a reconciliation of our GAAP net loss to FFO, see Funds from Operations and Modified
Funds from Operations below.

We anticipate that our aggregate borrowings, both secured and unsecured, will not exceed 60.0%
of all of our properties and other real estate-related assets combined fair market values, as
defined, as determined at the end of each calendar year beginning with our first full year of
operations. For these purposes, the fair market value of each asset will be equal to the purchase
price paid for the asset or, if the asset was appraised subsequent to the date of purchase, then
the fair market value will be equal to the value reported in the most recent independent appraisal
of the asset. Our policies do not limit the amount we may borrow with respect to any individual
investment. As of June 30, 2011, our borrowings were 43.1% of our properties combined fair market
values, as defined.

Under our charter, we have a limitation on borrowing that precludes us from borrowing in
excess of 300.0% of our net assets, without the approval of a majority of our independent
directors. Net assets for purposes of this calculation are defined to be our total assets (other
than intangibles), valued at cost prior to deducting depreciation, amortization, bad debt and other
non-cash reserves, less total liabilities. Generally, the preceding calculation is expected to
approximate 75.0% of the aggregate cost of our real estate and real estate-related investments
before depreciation, amortization, bad debt and other similar non-cash reserves. In addition, we
may incur mortgage debt and pledge some or all of our real properties as security for that debt to
obtain funds to acquire additional real estate or for working capital. We may also borrow funds to
satisfy the REIT tax qualification requirement that we distribute at least 90.0% of our annual
taxable income, excluding net capital gains, to our stockholders. Furthermore, we may borrow if we
otherwise deem it necessary or advisable to ensure that we qualify, or maintain our qualification,
as a REIT for federal income tax purposes. As of August 11, 2011 and June 30, 2011, our leverage
did not exceed 300.0% of the value of our net assets.

For a discussion of our lines of credit, see Note 8, Lines of Credit, to our accompanying
condensed consolidated financial statements.

REIT Requirements

In order to qualify as a REIT for federal income tax purposes, we are required to make
distributions to our stockholders of at least 90.0% of our annual taxable income, excluding net
capital gains. In the event that there is a shortfall in net cash available due to factors
including, without limitation, the timing of such distributions or the timing of the collection of
receivables, we may seek to obtain capital to pay distributions by means of secured debt financing
through one or more third parties. We may also pay distributions from cash from capital
transactions including, without limitation, the sale of one or more of our properties or from the
proceeds of our offering.

Commitments and Contingencies

For a discussion of our commitments and contingencies, see Note 10, Commitments and
Contingencies, to our accompanying condensed consolidated financial statements.

Our principal liquidity need is the payment of principal and interest on outstanding
indebtedness. As of June 30, 2011, we had $56,125,000 ($56,420,000, net of discount and premium) of
fixed rate debt and $27,249,000 ($26,968,000, net of discount) of variable rate debt outstanding
secured by our properties. In addition, we had $93,139,000 outstanding under our lines of credit.

We are required by the terms of certain loan documents to meet certain covenants, such as
occupancy ratios, leverage ratios, net worth ratios, debt service coverage ratios, liquidity
ratios, operating cash flow to fixed charges ratios, distribution ratios and reporting
requirements. As of June 30, 2011, we were in compliance with all such covenants and requirements
on our mortgage loans payable and our lines of credit and we expect to remain in compliance with
all such requirements for the next 12 months. As of June 30, 2011, the weighted average effective
interest rate on our outstanding debt, factoring in our fixed rate interest rate swaps, was 4.65%
per annum.

Contractual Obligations

The following table provides information with respect to (i) the maturity and scheduled
principal repayment of our secured mortgage loans payable and our lines of credit, (ii) interest
payments on our mortgage loans payable, lines of credit and fixed rate interest rate swaps, and
(iii) obligations under our ground leases, as of June 30, 2011:

Payments Due by Period

Less than 1 Year

1-3 Years

4-5 Years

More than 5 Years

(2011)

(2012-2013)

(2014-2015)

(after 2016)

Total

Principal payments 
fixed rate debt

$

23,609,000

$

5,762,000

$

1,611,000

$

25,143,000

$

56,125,000

Interest payments 
fixed rate debt

1,829,000

3,517,000

3,145,000

4,354,000

12,845,000

Principal payments 
variable rate debt

3,241,000

(1)

32,449,000

71,848,000

12,850,000

120,388,000

Interest payments 
variable rate debt (based
on rates in effect as of
June 30, 2011)

Our variable rate mortgage loan payable in the outstanding principal amount of $3,076,000
($2,795,000, net of discount) secured by Center for Neurosurgery and Spine as of June 30,
2011, had a fixed rate interest rate swap, thereby effectively fixing our interest rate on
this mortgage loan payable to an effective interest rate of 6.00% per annum. This mortgage
loan payable is due August 15, 2021; however, the principal balance is immediately due upon
written request from the seller confirming that the seller agrees to pay any interest rate
swap termination amount, if any. Assuming the seller does not exercise such right, interest
payments, using the 6.00% per annum effective interest rate, would be $92,000, $324,000,
$252,000 and $313,000 in 2011, 2012-2013, 2014-2015 and thereafter, respectively.

Off-Balance Sheet Arrangements

As of June 30, 2011, we had no off-balance sheet transactions nor do we currently have any
such arrangements or obligations.

Funds from Operations and Modified Funds from Operations

Due to certain unique operating characteristics of real estate companies, the National
Association of Real Estate Investment Trusts, or NAREIT, an industry trade group, has promulgated a
measure known as FFO, which we believe to be an appropriate supplemental measure to reflect the
operating performance of a REIT. The use of FFO is recommended by the REIT industry as a
supplemental performance measure. FFO is not equivalent to our net income or loss as determined
under GAAP.

We define FFO, a non-GAAP measure, consistent with the standards established by the White
Paper on FFO approved by the Board of Governors of NAREIT, as revised in February 2004, or the
White Paper. The White Paper defines FFO as net income or loss computed in accordance with GAAP,
excluding gains or losses from sales of property but including asset impairment writedowns, plus
depreciation and amortization, and after adjustments for unconsolidated partnerships and joint
ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect
FFO. Our FFO calculation complies with NAREITs policy described above.

The historical accounting convention used for real estate assets requires straight-line
depreciation of buildings and improvements, which implies that the value of real estate assets
diminishes predictably over time. Since real estate values historically rise and fall with market
conditions, presentations of operating results for a REIT, using historical accounting for
depreciation, we believe, may be less informative. As a result, we believe that the use of FFO,
which excludes the impact of real estate related depreciation and amortization, provides a more
complete understanding of our performance to investors and to our management, and when compared
year over year, reflects the impact on our operations from trends in occupancy rates, rental rates,
operating costs, general and administrative expenses, and interest costs, which is not immediately
apparent from net income or loss.

However, changes in the accounting and reporting rules under GAAP (for acquisition fees and
expenses from a capitalization/depreciation model to an expensed-as-incurred model) that have been
put into effect since the establishment of NAREITs definition of FFO have prompted an increase in
the non-cash and non-operating items included in FFO. In addition, we view fair value adjustments
of derivatives, and impairment charges and gains and losses from dispositions of assets as items
which are typically adjusted for when assessing operating performance. Lastly, publicly registered,
non-listed REITs typically have a significant amount of acquisition activity and are substantially
more dynamic during their initial years of investment and operation and therefore require
additional adjustments to FFO in evaluating performance. Due to these and other unique features of
publicly registered, non-listed REITs, the Investment Program Association, or the IPA, an industry
trade group, has standardized a measure known as modified funds from operations, or MFFO, which we
believe to be another appropriate supplemental measure to reflect the operating performance of a
REIT. The use of MFFO is recommended by the IPA as a supplemental performance measure for publicly
registered, non-listed REITs. MFFO is a metric used by management to evaluate sustainable
performance and distribution policy. In evaluating the performance of our portfolio over time,
management employs business models and analyses that differentiate the costs to acquire investments
from the investments revenues and expenses. Management believes that excluding acquisition costs
from MFFO provides investors with supplemental performance information that is consistent with the
performance models and analysis used by management, and provides investors a view of the
performance of our portfolio over time, including after the time we cease to acquire properties on
a frequent and regular basis. MFFO may provide investors with a useful indication of our future
performance, particularly after our acquisition stage, and of the sustainability of our current
distribution policy. However, because MFFO excludes acquisition expenses, which are an important
component in an analysis of historical performance, MFFO should not
be construed as a historical performance measure. MFFO is not equivalent to our net income or loss as determined under GAAP.

We define MFFO, a non-GAAP measure, consistent with the IPAs Guideline 2010-01, Supplemental
Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations, or
the Practice Guideline, issued by the IPA in November 2010. The Practice Guideline defines MFFO as
FFO further adjusted for the following items included in the determination of GAAP net income
(loss): acquisition fees and expenses; amounts relating to deferred rent receivables and
amortization of above and below market leases and liabilities; accretion of discounts and
amortization of premiums on debt investments; nonrecurring impairments of real estate-related
investments; mark-to-market adjustments included in net income; nonrecurring gains or losses
included in net income from the extinguishment or sale of debt, hedges, foreign exchange,
derivatives or securities holdings where trading of such holdings is not a fundamental attribute of
the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation
to, equity accounting, and after adjustments for consolidated and unconsolidated partnerships and
joint ventures, with such adjustments calculated to reflect MFFO on the same basis. Our MFFO
calculation complies with the IPAs Practice Guideline described above. In calculating MFFO, we
exclude acquisition related expenses, amortization of above and below market leases, fair value
adjustments of derivative financial instruments, gains or losses from the extinguishment of debt,
deferred rent receivables and the adjustments of such items related to noncontrolling interests.
The other adjustments included in the IPAs Practice Guideline are not applicable to us for the
three and six months ended June 30, 2011 and 2010.

Presentation of this information is intended to assist in comparing the operating performance
of different REITs, although it should be noted that not all REITs calculate FFO and MFFO the same
way, so comparisons with other REITs may not be meaningful. Furthermore, FFO and MFFO are not
necessarily indicative of cash flow available to fund cash needs and should not be considered as an
alternative to net income (loss) as an indication of our performance, as an indication of our
liquidity, or indicative of funds available to fund our cash needs including our ability to make
distributions to our stockholders. FFO and MFFO should be reviewed in conjunction with other
measurements as an indication of our performance.

The following is a reconciliation of net loss, which is the most directly comparable GAAP
financial measure, to FFO and MFFO for the three and six months ended June 30, 2011 and 2010:

Three Months Ended

Six Months Ended

June 30,

June 30,

2011

2010

2011

2010

Net loss

$

(6,880,000

)

$

(2,059,000

)

$

(7,765,000

)

$

(2,862,000

)

Add:

Depreciation and amortization
 consolidated properties

3,274,000

536,000

5,476,000

565,000

Less:

Net income attributable to
noncontrolling interests

(1,000

)



(1,000

)



Depreciation and amortization related to
noncontrolling interests

(3,000

)



(5,000

)



FFO

$

(3,610,000

)

$

(1,523,000

)

$

(2,295,000

)

$

(2,297,000

)

Add:

Acquisition related expenses

$

7,236,000

$

1,695,000

$

8,785,000

$

2,332,000

Amortization of above and below market leases

80,000

21,000

125,000

21,000

Loss in fair value of derivative financial instruments

299,000

120,000

225,000

120,000

Loss on extinguishment of debt





42,000



Deferred rent receivables related to
noncontrolling interests





1,000



Less:

Deferred rent receivables

(464,000

)

(73,000

)

(913,000

)

(84,000

)

MFFO

$

3,541,000

$

240,000

$

5,970,000

$

92,000

Weighted average common shares
outstanding  basic and diluted

25,543,273

5,558,762

21,864,450

4,132,705

Net loss per common share  basic and diluted

$

(0.27

)

$

(0.37

)

$

(0.36

)

$

(0.69

)

FFO per common share  basic and diluted

$

(0.14

)

$

(0.27

)

$

(0.10

)

$

(0.56

)

MFFO per common share  basic and diluted

$

0.14

$

0.04

$

0.27

$

0.02

Net Operating Income

Net operating income is a non-GAAP financial measure that is defined as net income (loss),
computed in accordance with GAAP, generated from properties before general and administrative
expenses, acquisition related expenses, depreciation and amortization, interest expense and
interest income. We believe that net operating income is useful for investors as it provides an
accurate measure of the operating performance of our operating assets because net operating income
excludes certain items that are not associated with the management of the properties. Additionally,
we believe that net operating income is a widely accepted measure of comparative operating
performance in the real estate community. However, our use of the term net operating income may not
be comparable to that of other real estate companies as they may have different methodologies for
computing this amount.

There were no material changes in the information regarding market risk, or in the methods we
use to manage market risk, that was provided in our 2010 Annual Report on Form 10-K, as filed with
the SEC on March 10, 2011.

The table below presents, as of June 30, 2011, the principal amounts and weighted average
interest rates by year of expected maturity to evaluate the expected cash flows and sensitivity to
interest rate changes.

Expected Maturity Date

2011

2012

2013

2014

2015

Thereafter

Total

Fair Value

Fixed rate debt  principal
payments

$

23,609,000

$

5,009,000

$

753,000

$

787,000

$

824,000

$

25,143,000

$

56,125,000

$

56,828,000

Weighted average interest
rate on maturing debt

6.33

%

5.87

%

5.79

%

5.79

%

5.79

%

5.86

%

6.06

%



Variable rate debt 
principal payments

$

3,241,000

$

32,106,000

$

343,000

$

71,489,000

$

359,000

$

12,850,000

$

120,388,000

$

119,623,000

Weighted average interest
rate on maturing debt
(based on rates in effect
as of June 30, 2011)

1.37

%

4.23

%

2.85

%

3.73

%

2.83

%

2.85

%

3.70

%



Mortgage loans payable were $83,374,000 ($83,388,000, net of discount and premium)
as of June 30, 2011. As of June 30, 2011, we had five fixed rate and four variable rate mortgage
loans payable with effective interest rates ranging from 1.29% to 6.60% per annum and a weighted
average effective interest rate of 5.26% per annum. As of June 30, 2011, we had $56,125,000
($56,420,000, net of discount and premium) of fixed rate debt, or 67.3% of mortgage loans payable,
at a weighted average effective interest rate of 6.06% per annum and $27,249,000 ($26,968,000, net
of discount) of variable rate debt, or 32.7% of mortgage loans payable, at a weighted average
effective interest rate of 3.62% per annum. In addition, as of June 30, 2011, we had $93,139,000
outstanding under our lines of credit, at a weighted-average interest rate of 3.72% per annum.

As of June 30, 2011, the weighted average effective interest rate on our outstanding debt,
factoring in our fixed rate interest rate swaps, was 4.65% per annum. $3,076,000 of our variable
rate mortgage loans payable is due August 15, 2021; however, the principal balance is immediately
due upon written request from the seller confirming that the seller agrees to pay the interest rate
swap termination amount, if any, and as such, the $3,076,000 principal balance is reflected in the
2011 column above.

An increase in the variable interest rate on our lines of credit and our variable rate
mortgage loans payable constitutes a market risk. As of June 30, 2011, a 0.50% increase in the
London Interbank Offered Rate, or LIBOR, would have no effect on our overall annual interest
expense on our mortgage loans payable as either: (i) we have a fixed rate interest rate swap on the
variable rate mortgage loan payable; or (ii) we are paying the minimum interest rates under the
applicable agreements whereby a 0.50% increase would still be below the minimum interest rate.
As of June 30, 2011, a 0.50% increase in LIBOR would have increased our overall interest
expense on our lines of credit and mortgage loans payables by $472,000, or 9.2%.

In addition to changes in interest rates, the value of our future investments is subject to
fluctuations based on changes in local and regional economic conditions and changes in the
creditworthiness of tenants, which may affect our ability to refinance our debt if necessary.

Item 4.

Controls and Procedures.

(a) Evaluation of disclosure controls and procedures. We maintain disclosure controls and
procedures that are designed to ensure that information required to be disclosed in our reports
under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed,
summarized and reported within the time periods specified in the rules and forms, and that such
information is accumulated and communicated to us, including our chief executive officer and chief
financial officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, an evaluation as of June 30,
2011 was conducted under the supervision and with the participation of our management, including
our chief executive officer and chief financial officer, of the effectiveness of our disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based
on this evaluation, our chief executive officer and chief financial officer concluded that our
disclosure controls and procedures, as of June 30, 2011, were effective.

(b) Changes in internal control over financial reporting. There were no changes in internal
control over financial reporting that occurred during the fiscal quarter ended June 30, 2011 that
have materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting.

There were no material changes from the risk factors previously disclosed in our 2010 Annual
Report on Form 10-K, as filed with the United States Securities and Exchange Commission, or the
SEC, on March 10, 2011, except as noted below.

We have not had sufficient cash available from operations to pay distributions, and therefore,
we have paid distributions from the net proceeds of our offering, from borrowings in anticipation
of future cash flows or from other sources, such as our sponsor. Any such distributions may reduce
the amount of capital we ultimately invest in assets and negatively impact the value of our
stockholders investment.

Distributions payable to our stockholders may include a return of capital, rather than a
return on capital. We have not established any limit on the amount of proceeds from our offering
that may be used to fund distributions, except that, in accordance with our organizational
documents and Maryland law, we may not make distributions that would: (i) cause us to be unable to
pay our debts as they become due in the usual course of business; (ii) cause our total assets to be
less than the sum of our total liabilities plus senior liquidation preferences; or (iii) jeopardize
our ability to qualify or maintain our qualification as a real estate investment trust, or REIT.
The actual amount and timing of distributions are determined by our board of directors in its sole
discretion and typically will depend on the amount of funds available for distribution, which will
depend on items such as our financial condition, current and projected capital expenditure
requirements, tax considerations and annual distribution requirements needed to qualify or maintain
our qualification as a REIT. As a result, our distribution rate and payment frequency vary from
time to time.

We have used, and in the future may use, the net proceeds from our offering, borrowed funds,
or other sources, such as Grubb & Ellis Company, or Grubb & Ellis, or our sponsor, to pay cash
distributions to our stockholders in order to qualify or maintain our qualification as a REIT,
which may reduce the amount of proceeds available for investment and operations or cause us to
incur additional interest expense as a result of borrowed funds. As a result, the amount of net
proceeds available for investment and operations would be reduced, or we may incur additional
interest expense as a result of borrowed funds. Further, if the aggregate amount of cash
distributed in any given year exceeds the amount of our current and accumulated earnings and
profits, the excess amount will be deemed a return of capital.

Our board of directors authorized a daily distribution to our stockholders of record as of the
close of business on each day of the period commencing on January 1, 2010 and ending on June 30,
2010, as a result of our sponsor, Grubb & Ellis, advising us that it intended to fund these
distributions until we acquired our first property. We acquired our first property, Lacombe Medical
Office Building, on March 5, 2010. Our sponsor did not receive any additional shares of our common
stock or other consideration for funding these distributions, and we will not repay the funds
provided by our sponsor for these distributions. Our sponsor is not obligated to contribute monies
to fund any subsequent distributions. Subsequently, our board of directors authorized, on a
quarterly basis, a daily distribution to our stockholders of record as of the close of business on
each day of the quarterly periods commencing on July 1, 2010 and ending on September 30, 2011.

The distributions are calculated based on 365 days in the calendar year and are equal to
$0.0017808 per day per share of common stock, which is equal to an annualized distribution rate of
6.5%, assuming a purchase price of $10.00 per share. These distributions are aggregated and paid in
cash or shares of our common stock pursuant to the distribution reinvestment plan, or DRIP, monthly
in arrears. The distributions declared for each record date are paid only from legally available
funds. We can provide no assurance that we will be able to continue this distribution rate or pay
any subsequent distributions.

For the six months ended June 30, 2011, we paid distributions of $6,335,000 ($3,215,000 in
cash and $3,121,000 in shares of our common stock pursuant to the DRIP). None of our distributions
were paid from cash flows from operations of $(892,000) and $6,335,000, or 100%, of the
distributions were paid from our offering proceeds. For the six months ended June 30, 2010, we paid
distributions of $979,000 ($477,000 in cash and $502,000 in shares of our common stock pursuant to
our distribution reinvestment plan, or the DRIP), none of which were paid from cash flows from
operations of $(1,603,000). $259,000, or 26.5%, of the distributions were paid using funds from our
sponsor. The distributions in excess of funds from our sponsor were paid from offering proceeds.
Under accounting principles generally accepted in the United States of America, or GAAP,
acquisition related expenses are expensed, and therefore, subtracted from cash flows from
operations. However, these expenses are paid from offering proceeds.

For a further discussion of distributions, see Part I, Item 2. Managements Discussion and
Analysis of Financial Condition and Results of Operations  Liquidity and Capital Resources 
Distributions.

As of June 30, 2011, we had an amount payable of $495,000 to our advisor or its affiliates for
lease commissions, asset and property management fees, operating expenses, on-site personnel
payroll and acquisition related expenses, which will be paid from cash flows from operations in the
future as they become due and payable by us in the ordinary course of business consistent with our
past practice.

As of June 30, 2011, no amounts due to our advisor or its affiliates have been deferred,
waived or forgiven. Our advisor and its affiliates have no obligations to defer, waive or forgive
amounts due to them. In the future, if our advisor or its affiliates do not defer, waive or forgive
amounts due to them, this would negatively affect our cash flows from operations, which could
result in us paying distributions, or a portion thereof, with the net proceeds from our offering,
funds from our sponsor or borrowed funds. As a result, the amount of proceeds available for
investment and operations would be reduced, or we may incur additional interest expense as a result
of borrowed funds.

For the six months ended June 30, 2011 and 2010, our funds from operations, or FFO, were
$(2,295,000) and $(2,297,000), respectively. For the six months ended June 30, 2011, we paid
distributions of $6,335,000, or 100%, using proceeds from our offering. For the six months ended
June 30, 2010, we paid distributions of $259,000, or 26.5%, using funds from our sponsor and
$720,000, or 73.5%, from proceeds from our offering. The payment of distributions from sources
other than FFO may reduce the amount of proceeds available for investment and operations or cause
us to incur additional interest expense as a result of borrowed funds. For a further discussion of
FFO, which includes a reconciliation of our GAAP net loss to FFO, see Part I, Item 2. Managements
Discussion and Analysis of Financial Condition and Results of Operations  Funds from Operations
and Modified Funds from Operations.

Our success is dependent on the performance of our sponsor.

Our ability to achieve our investment objectives and to conduct our operations is
dependent upon the performance of our advisor, which is a subsidiary of Grubb & Ellis Company, or
Grubb & Ellis, or our sponsor. Our sponsors business is sensitive to trends in the general
economy, as well as the commercial real estate and credit markets. The current macroeconomic
environment and accompanying credit crisis has negatively impacted the value of commercial real
estate assets, contributing to a general slow-down in our sponsors industry. A prolonged and
pronounced recession could continue or accelerate the reduction in overall transaction volume and
size of sales and leasing activities that our sponsor has already experienced and would continue to
put downward pressure on our sponsors revenues and operating results. To the extent that any
decline in our sponsors revenues and operating results impacts the performance of our advisor, our
results of operations and financial condition could also suffer.

In addition, our sponsor has announced, among other things, that it has retained JMP
Securities LLC as an advisor to explore strategic alternatives for Grubb & Ellis, including a
potential merger or sale transaction. Our sponsor disclosed in its Form 10-K for the year ended
December 31, 2010 that it entered into a commitment letter and exclusivity agreement with Colony
Capital Acquisitions, LLC, pursuant to which (i) Colony Capital Acquisitions, LLC and one or more
of its affiliates, or collectively, Colony, agreed to provide an $18,000,000 senior secured term
loan credit facility, or the Senior Secured Credit Facility, and (ii) Colony obtained the exclusive
right for 60 days, commencing on March 30, 2011, to negotiate a strategic transaction with our
sponsor. On April 18,
2011, our sponsor announced that it had closed the $18,000,000 Senior Secured Credit Facility
and had drawn the initial $9,000,000 tranche under such facility. On May 29, 2011, the exclusivity
period ended with respect to negotiations for a strategic transaction between Colony and our
sponsor, which allows our sponsor to engage in discussions with parties other than, or in addition
to, Colony. There can be no assurance that any strategic transaction with Colony, or with any other
strategic partner, will be completed. If our sponsor does not complete a strategic transaction with
Colony, or with any other strategic partner, such result could have a material adverse effect on
our sponsors revenues, which could negatively impact the performance of our advisor and could
cause our results of operations and financial condition to suffer. Similarly, if our sponsor enters
into a merger or sale transaction, the effect of such a transaction is unknown, but could have a
material adverse effect on the performance of our advisor, which could cause our results of
operations and financial condition to suffer.

Furthermore, on May 19, 2011, our sponsor received written notice, or the Notice, from NYSE
Regulation, Inc. that it is not currently in compliance with the continued listing standards of the
New York Stock Exchange, or the NYSE, which require an average market capitalization of not less
than $50 million over 30 consecutive trading days and shareholders equity of not less than $50
million. Our sponsor intends to notify the NYSE that it will submit a plan, or the Grubb & Ellis
Plan, within 45 days from the receipt of the Notice that demonstrates its ability to regain
compliance within 18 months. Upon receipt of the Plan, the NYSE has 45 calendar days to review and
determine whether our sponsor has made a reasonable demonstration of its ability to come into
conformity with the relevant standards within the 18-month period, or whether it will require our
sponsor to do so within a lesser time period. The NYSE will either (i) accept the Plan, at which
time it would specify the applicable time period within which our sponsor has to come into
compliance and continue to monitor our sponsor for compliance with the Plan or (ii) reject the
Plan, at which time our sponsor would be subject to suspension and delisting proceedings. If the
trading of our sponsors stock on the NYSE is suspended or our sponsors stock is delisted from the
NYSE, such result could have a material adverse effect on our sponsors revenues, which could
negatively impact the performance of our advisor and could cause our results of operations and
financial condition to suffer.

Our stockholders may be unable to sell their shares of our common stock because their ability to
have their shares of our common stock repurchased pursuant to our share repurchase plan is subject
to significant restrictions and limitations.

Our share repurchase plan includes significant restrictions and limitations. Except in
cases of death or qualifying disability, our stockholders must hold their shares of our common
stock for at least one year. Requesting stockholders must present at least 25.0% of their shares of
our common stock for repurchase and until they have held their shares of our common stock for at
least four years, repurchases will be made for less than our stockholders paid for their shares of
our common stock. Shares of our common stock may be repurchased quarterly, at our discretion, on a
pro rata basis, and are limited during any calendar year to 5.0% of the weighted average number of
shares of our common stock outstanding during the prior calendar year; provided however, that
shares of our common stock subject to a repurchase requested upon the death of a stockholder will
not be subject to this cap. Funds for the repurchase of shares of our common stock will come
exclusively from the cumulative proceeds we receive from the sale of shares of our common stock
pursuant to the DRIP. In addition, our board of directors may reject share repurchase requests in
its sole discretion and reserves the right to amend, suspend or terminate our share repurchase plan
at any time upon 30 days written notice. Therefore, in making a decision to purchase shares of our
common stock, our stockholders should not assume that they will be able to sell any of their shares
of our common stock back to us pursuant to our share repurchase plan and they also should
understand that the repurchase price will not necessarily correlate to the value of our real estate
holdings or other assets. If our board of directors terminates our share repurchase plan, our
stockholders may not be able to sell their shares of our common stock even if our stockholders deem
it necessary or desirable to do so.

Our Registration Statement on Form S-11 (File No. 333-158111), registering a public offering
of up to 330,000,000 shares of our common stock, was declared effective under the Securities Act of
1933, as amended, or the Securities Act, on August 24, 2009. Until April 18, 2011, Grubb & Ellis
Securities, Inc., or Grubb & Ellis Securities, served as the dealer manager of our offering.
Effective as of April 19, 2011, the dealer manager
agreement with Grubb & Ellis Securities was assigned to, and assumed by, Grubb & Ellis Capital
Corporation, a wholly owned subsidiary of our sponsor. We are offering to the public up to
300,000,000 shares of our common stock for $10.00 per share in our primary offering and 30,000,000
shares of our common stock pursuant to the DRIP for $9.50 per share, for a maximum offering of up
to $3,285,000,000.

As of June 30, 2011, we had received and accepted subscriptions in our offering for 29,270,824
shares of our common stock, or $292,093,000, excluding shares of our common stock issued pursuant
to the DRIP. As of June 30, 2011, a total of $5,106,000 in distributions were reinvested and
537,451 shares of our common stock were issued pursuant to the DRIP.

As of June 30, 2011, we had incurred selling commissions of $19,881,000 and dealer manager
fees of $8,753,000 in connection with our offering. We had also incurred other offering expenses of
$2,927,000 as of such date. Such fees and reimbursements were incurred to our affiliates and are
charged to stockholders equity as such amounts are reimbursed from the gross proceeds of our
offering. The cost of raising funds in our offering as a percentage of gross proceeds received in
our primary offering was 10.8% as of June 30, 2011 and will not exceed 11.0% in the aggregate. As
of June 30, 2011, net offering proceeds were $265,638,000, including proceeds from the DRIP and
after deducting offering expenses.

As of June 30, 2011, $719,000 remained payable to our dealer manager, our advisor or its
affiliates for offering related costs.

As of June 30, 2011, we had used $203,185,000 in proceeds from our offering to purchase
properties from unaffiliated parties, $11,355,000 to pay acquisition related expenses to affiliated
parties, $2,679,000 for lender required restricted cash accounts to unaffiliated parties,
$3,895,000 for deferred financing costs to unaffiliated parties, $4,206,000 to pay acquisition
related expenses to unaffiliated parties, $31,711,000 to repay borrowings from unaffiliated parties
incurred in connection with previous acquisitions and $150,000 to pay real estate deposits to unaffiliated parties for
proposed future acquisitions.

Unregistered Sales of Equity Securities

On June 14, 2011, in connection with their re-election, we issued an aggregate of 7,500 shares
of our restricted common stock to our independent directors pursuant to the 2009 Incentive Plan in
a private transaction exempt from registration pursuant to Section 4(2) of the Securities Act. Each
of these restricted common stock awards vested 20.0% on the grant date and 20.0% will vest on each
of the first four anniversaries of the date of grant.

Purchase of Equity Securities by the Issuer and Affiliated Purchasers

Our share repurchase plan allows for repurchases of shares of our common stock by us when
certain criteria are met. Share repurchases will be made at the sole discretion of our board of
directors. All repurchases are subject to a one-year holding period, except for repurchases made in
connection with a stockholders death or qualifying disability, as defined in our share
repurchase plan. Subject to the availability of the funds for share repurchases, we will limit the
number of shares of our common stock repurchased during any calendar year to 5.0% of the weighted
average number of shares of our common stock outstanding during the prior calendar year; provided,
however, that shares subject to a repurchase requested upon the death of a stockholder will not be
subject to this cap. Funds for the repurchase of shares of our common stock will come exclusively
from the cumulative proceeds we receive from the sale of shares of our common stock pursuant to the
DRIP.

The prices per share at which we will repurchase shares of our common stock will range,
depending on the length of time the stockholder held such shares, from 92.5% to 100% of the price
paid per share to acquire such shares from us. However, if shares of our common stock are to be
repurchased in connection with a stockholders death or qualifying disability, the repurchase price
will be no less than 100% of the price paid to acquire the shares of our common stock from us.

Subject to funds being available, we will limit the number of shares of our common stock
repurchased during any calendar year to 5.0% of the weighted average number of shares of our
common stock outstanding during the prior calendar year; provided however, shares of our
common stock subject to a repurchase requested upon the death of a stockholder will not be
subject to this cap.

Item 3.

Defaults Upon Senior Securities.

None.

Item 4.

[Removed and Reserved.]

Item 5.

Other Information.

None.

Item 6.

Exhibits.

The exhibits listed on the Exhibit Index (following the signatures section of this Quarterly
Report on Form 10-Q) are included, or incorporated by reference, in this Quarterly Report on Form
10-Q.

The following exhibits are included, or incorporated by reference, in this Quarterly Report on
Form 10-Q for the period ended June 30, 2011 (and are numbered in accordance with Item 601 of
Regulation S-K).

Articles of Amendment to the Second Articles of Amendment and Restatement of Grubb & Ellis
Healthcare REIT II, Inc. dated September 1, 2009 (included as Exhibit 3.1 to our Current
Report on Form 8-K filed September 3, 2009 and incorporated herein by reference)

3.3

Second Articles of Amendment to the Second Articles of Amendment and Restatement of Grubb &
Ellis Healthcare REIT II, Inc. dated September 18, 2009 (included as Exhibit 3.1 to our
Current Report on Form 8-K filed September 21, 2009 and incorporated herein by reference)

3.4

Third Articles of Amendment to Second Articles of Amendment and Restatement of Grubb & Ellis
Healthcare REIT II, Inc. dated June 15, 2011 (included as Exhibit 3.1 to our Current Report on
Form 8-K filed June 16, 2011 and incorporated herein by reference)

Promissory Note by G&E HC REIT II Muskogee LTACH, LLC for the benefit of Capital One, N.A.,
dated April 8, 2011 (included as Exhibit 10.1 to our Current Report on Form 8-K/A filed April
15, 2011 and incorporated herein by reference)

10.2

Loan Agreement by and between G&E HC REIT II Muskogee LTACH, LLC and Capital One, N.A., dated
April 8, 2011 (included as Exhibit 10.2 to our Current Report on Form 8-K/A filed April 15,
2011 and incorporated herein by reference)

10.3

Mortgage, Security Agreement and Fixture Filing by G&E HC REIT II Muskogee LTACH, LLC for the
benefit of Capital One, N.A., dated April 8, 2011 (included as Exhibit 10.3 to our Current
Report on Form 8-K/A filed April 15, 2011 and incorporated herein by reference)

10.4

Assignment of Leases and Rents by G&E HC REIT II Muskogee LTACH, LLC for the benefit of
Capital One, N.A., dated April 8, 2011 (included as Exhibit 10.4 to our Current Report on Form
8-K/A filed April 15, 2011 and incorporated herein by reference)

10.5

International Swap Dealers Association, Inc. Master Agreement by and between by G&E HC REIT
II Muskogee LTACH, LLC and Capital One, N.A., dated April 12, 2011 (included as Exhibit 10.5
to our Current Report on Form 8-K/A filed April 15, 2011 and incorporated herein by reference)

10.6

Purchase and Sale Agreement by and between G&E HC REIT II Jersey City MOB, LLC and Jersey
City Medical Complex, LLC, dated April 20, 2011 (included as Exhibit 10.1 to our Current
Report on Form 8-K filed April 26, 2011 and incorporated herein by reference)

10.7

Purchase and Sale Agreement by and between G&E HC REIT II Bryant MOB, LLC and Bryant MOB
Medical Complex, LLC, dated April 20, 2011 (included as Exhibit 10.2 to our Current Report on
Form 8-K filed April 26, 2011 and incorporated herein by reference)

Purchase and Sale Agreement by and between G&E HC REIT II Benton Home Health MOB, LLC and
Home Health Medical Complex, LLC, dated April 20, 2011 (included as Exhibit 10.3 to our
Current Report on Form 8-K filed April 26, 2011 and incorporated herein by reference)

10.9

Purchase and Sale Agreement by and between G&E HC REIT II Benton Medical Plaza I & II MOB,
LLC and Medical Park Place Medical Complex, LLC, dated April 20, 2011 (included as Exhibit
10.4 to our Current Report on Form 8-K filed April 26, 2011 and incorporated herein by
reference)

10.10

First Amendment to Purchase and Sale Agreement and Escrow Instructions by and between G&E HC
REIT II Dixie-Lobo MOB Portfolio, LLC and TMB-Alice, L.P., Carlsbad-TMB, LLC, Hobbs-TMB, LLC,
Hope-TMB, LLC, TMB-Lake Charles, L.P., TMB-Lufkin, L.P., Victoria-TMB, L.P. and TMB-I, L.P.
and First American Title Insurance Company, dated April 25, 2011 (included as Exhibit 10.1 to
our Current Report on Form 8-K filed April 29, 2011 and incorporated herein by reference)

10.11

First Amendment to Purchase and Sale Agreement and Escrow Instructions by and between G&E HC
REIT II Jersey City MOB, LLC and Jersey City Medical Complex, LLC, dated April 29, 2011
(included as Exhibit 10.1 to our Current Report on Form 8-K filed May 5, 2011 and incorporated
herein by reference)

10.12

First Amendment to Purchase and Sale Agreement and Escrow Instructions by and between G&E HC
REIT II Bryant MOB, LLC and Bryant MOB Medical Complex, LLC, dated April 29, 2011 (included as
Exhibit 10.2 to our Current Report on Form 8-K filed May 5, 2011 and incorporated herein by
reference)

10.13

First Amendment to Purchase and Sale Agreement and Escrow Instructions by and between G&E HC
REIT II Benton Home Health MOB, LLC and Home Health Medical Complex, LLC, dated April 29, 2011
(included as Exhibit 10.3 to our Current Report on Form 8-K filed May 5, 2011 and incorporated
herein by reference)

10.14

First Amendment to Purchase and Sale Agreement and Escrow Instructions by and between G&E HC
REIT II Benton Medical Plaza I & II MOB, LLC and Medical Park Place Medical Complex, LLC,
dated April 29, 2011 (included as Exhibit 10.4 to our Current Report on Form 8-K filed May 5,
2011 and incorporated herein by reference)

First Amendment to and Reaffirmation of Guaranty Agreement between Grubb & Ellis Healthcare
REIT II, Inc. and Bank of America, N.A., dated May 4, 2011 (included as Exhibit 10.7 to our
Current Report on Form 8-K filed May 5, 2011 and incorporated herein by reference)

10.18

First Amendment to Open-ended Mortgage, Assignment of Leases and Rents, Security Agreement
and Fixture Filing by G&E HC REIT II Parkway Medical Center, LLC in favor of Bank of America,
N.A., dated May 4, 2011 (included as Exhibit 10.8 to our Current Report on Form 8-K filed May
5, 2011 and incorporated herein by reference)

10.18

First Amendment to Multiple Indebtedness Mortgage, Assignment of Leases and Rents, Security
Agreement and Fixture Filing by G&E HC REIT II Lacombe MOB, LLC in favor of Bank of America,
N.A., dated May 4, 2011 (included as Exhibit 10.9 to our Current Report on Form 8-K filed May
5, 2011 and incorporated herein by reference)

10.19

First Amendment to Multiple Indebtedness Mortgage, Assignment of Leases and Rents, Security
Agreement and Fixture Filing by G&E HC REIT II St. Vincent Cleveland MOB, LLC in favor of Bank
of America, N.A., dated May 4, 2011 (included as Exhibit 10.10 to our Current Report on Form
8-K filed May 5, 2011 and incorporated herein by reference)

10.20

First Amendment to Leasehold Deed of Trust, Assignment of Leases and Rents, Security
Agreement, Fixture Filing and Financing Statement by G&E HC REIT II Livingston MOB, LLC in
favor of Bank of America, N.A., dated May 4, 2011 (included as Exhibit 10.11 to our Current
Report on Form 8-K filed May 5, 2011 and incorporated herein by reference)

First Amendment to Leasehold Deed of Trust, Assignment of Leases and Rents, Security
Agreement and Fixture Filing by G&E HC REIT II Sylva MOB, LLC in favor of Bank of America,
N.A., dated May 4, 2011 (included as Exhibit 10.12 to our Current Report on Form 8-K filed May
5, 2011 and incorporated herein by reference)

10.22

First Amendment to Leasehold Deed of Trust, Assignment of Leases and Rents, Security
Agreement, Fixture Filing and Financing Statement by G&E HC REIT II Ennis MOB, LLC in favor of
Bank of America, N.A., dated May 4, 2011 (included as Exhibit 10.13 to our Current Report on
Form 8-K filed May 5, 2011 and incorporated herein by reference)

10.23

First Amendment to Multiple Indebtedness Mortgage, Assignment of Leases and Rents, Security
Agreement and Fixture Filing by G&E HC REIT II St. Vincent Cleveland MOB, LLC in favor of Bank
of America, N.A., dated May 4, 2011 (included as Exhibit 10.1 to our Current Report on Form
8-K filed May 6, 2011 and incorporated herein by reference)

10.24

Second Amendment to Purchase and Sale Agreement and Escrow Instructions by and between G&E
HC REIT II Jersey City MOB, LLC and Jersey City Medical Complex, LLC, dated May 4, 2011
(included as Exhibit 10.1 to our Current Report on Form 8-K filed May 10, 2011 and
incorporated herein by reference)

10.25

Second Amendment to Purchase and Sale Agreement and Escrow Instructions by and between G&E
HC REIT II Bryant MOB, LLC and Bryant MOB Medical Complex, LLC, dated May 4, 2011 (included as

Exhibit 10.2 to our Current Report on Form 8-K filed May 10, 2011 and incorporated herein by
reference)

10.26

Second Amendment to Purchase and Sale Agreement and Escrow Instructions by and between G&E
HC REIT II Benton Home Health MOB, LLC and Home Health Medical Complex, LLC, dated May 4, 2011
(included as Exhibit 10.3 to our Current Report on Form 8-K filed May 10, 2011 and
incorporated herein by reference)

10.27

Second Amendment to Purchase and Sale Agreement and Escrow Instructions by and between G&E
HC REIT II Benton Medical Plaza I & II MOB, LLC and Medical Park Place Medical Complex, LLC,
dated May 4, 2011 (included as Exhibit 10.4 to our Current Report on Form 8-K filed May 10,
2011 and incorporated herein by reference)

Leasehold Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture
Filing by TMB-Alice, L.P. for the benefit of General Electric Capital Corporation, dated
December 29, 2006 (included as Exhibit 10.4 to our Current Report on Form 8-K filed May 18,
2011 and incorporated herein by reference)

10.32

Line of Credit Leasehold Mortgage, Assignment of Leases and Rents, Security Agreement and
Fixture Filing by TMB-Carlsbad, LLC for the benefit of General Electric Capital Corporation,
dated December 29, 2006 (included as Exhibit 10.5 to our Current Report on Form 8-K filed May
18, 2011 and incorporated herein by reference)

10.33

Line of Credit Leasehold Mortgage, Assignment of Leases and Rents, Security Agreement and
Fixture Filing by Hobbs-TMB, LLC for the benefit of General Electric Capital Corporation,
dated December 29, 2006 (included as Exhibit 10.6 to our Current Report on Form 8-K filed May
18, 2011 and incorporated herein by reference)

Construction and Leasehold Mortgage, Assignment of Leases and Rents, Security Agreement and
Fixture Filing by Hope-TMB, LLC for the benefit of General Electric Capital Corporation, dated
December 29, 2006 (included as Exhibit 10.7 to our Current Report on Form 8-K filed May 18,
2011 and incorporated herein by reference)

10.35

Multiple Indebtedness Leasehold Mortgage, Assignment of Leases and Rents, Security Agreement
and Fixture Filing by TMB-Lake Charles, L.P. for the benefit of General Electric Capital
Corporation, dated December 29, 2006 (included as Exhibit 10.8 to our Current Report on Form
8-K filed May 18, 2011 and incorporated herein by reference)

10.36

Leasehold Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture
Filing by TMB-Lufkin, L.P. for the benefit of General Electric Capital Corporation, dated
December 29, 2006 (included as Exhibit 10.9 to our Current Report on Form 8-K filed May 18,
2011 and incorporated herein by reference)

10.37

Leasehold Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture
Filing by Victoria-TMB, L.P. for the benefit of General Electric Capital Corporation, dated
December 29, 2006 (included as Exhibit 10.10 to our Current Report on Form 8-K filed May 18,
2011 and incorporated herein by reference)

10.38

Leasehold Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture
Filing by TMB-I, L.P. for the benefit of General Electric Capital Corporation, dated December
29, 2006 (included as Exhibit 10.11 to our Current Report on Form 8-K filed May 18, 2011 and
incorporated herein by reference)

10.39

Reinstatement of and Third Amendment to Purchase and Sale Agreement and Escrow Instructions
by and between G&E HC REIT II Jersey City MOB, LLC and Jersey City Medical Complex, LLC, dated
May 26, 2011 (included as Exhibit 10.1 to our Current Report on Form 8-K filed June 1, 2011
and incorporated herein by reference)

10.40

Reinstatement of and Third Amendment to Purchase and Sale Agreement and Escrow Instructions
by and between G&E HC REIT II Bryant MOB, LLC and Bryant MOB Medical Complex, LLC, dated May
26, 2011 (included as Exhibit 10.2 to our Current Report on Form 8-K filed June 1, 2011 and
incorporated herein by reference)

10.41

Reinstatement of and Third Amendment to Purchase and Sale Agreement and Escrow Instructions
by and between G&E HC REIT II Benton Home Health MOB, LLC and Home Health Medical Complex,
LLC, dated May 26, 2011 (included as Exhibit 10.3 to our Current Report on Form 8-K filed June
1, 2011 and incorporated herein by reference)

10.42

Reinstatement of and Third Amendment to Purchase and Sale Agreement and Escrow Instructions
by and between G&E HC REIT II Benton Medical Plaza I & II MOB, LLC and Medical Park Place
Medical Complex, LLC, dated May 26, 2011 (included as Exhibit 10.4 to our Current Report on
Form 8-K filed June 1, 2011 and incorporated herein by reference)

10.43

Bill Of Sale, Assignment and Assumption of Leases and Contracts by and between G&E HC REIT
II Jersey City MOB, LLC and Jersey City Medical Complex, LLC, dated May 26, 2011 (included as
Exhibit 10.5 to our Current Report on Form 8-K filed June 1, 2011 and incorporated herein by
reference)

10.44

Bill Of Sale, Assignment and Assumption of Leases and Contracts by and between G&E HC REIT
II Bryant MOB, LLC and Bryant MOB Medical Complex, LLC, dated May 26, 2011 (included as
Exhibit 10.6 to our Current Report on Form 8-K filed June 1, 2011 and incorporated herein by
reference)

10.45

Bill Of Sale, Assignment and Assumption of Leases and Contracts by and between G&E HC REIT
II Benton Home Health MOB, LLC and Home Health Medical Complex, LLC, dated May 26, 2011
(included as Exhibit 10.7 to our Current Report on Form 8-K filed June 1, 2011 and
incorporated herein by reference)

10.46

Bill Of Sale, Assignment and Assumption of Leases and Contracts by and between G&E HC REIT
II Benton Medical Plaza I & II MOB, LLC and Medical Park Place Medical Complex, LLC, dated May
26, 2011 (included as Exhibit 10.8 to our Current Report on Form 8-K filed June 1, 2011 and
incorporated herein by reference)

10.47

Assignment and Assumption of Ground Lease by and between G&E HC REIT II Jersey City MOB, LLC
and Jersey City Medical Complex, LLC, dated May 26, 2011 (included as Exhibit 10.9 to our
Current Report on Form 8-K filed June 1, 2011 and incorporated herein by reference)

10.48

Special Warranty Deed by Bryant MOB Medical Complex, LLC for the benefit of G&E HC REIT II
Bryant MOB, LLC, dated May 26, 2011 (included as Exhibit 10.10 to our Current Report on Form
8-K filed June 1, 2011 and incorporated herein by reference)

Special Warranty Deed by Home Health Medical Complex, LLC for the benefit of G&E HC REIT II
Benton Home Health MOB, LLC, dated May 26, 2011 (included as Exhibit 10.11 to our Current
Report on Form 8-K filed June 1, 2011 and incorporated herein by reference)

10.50

Special Warranty Deed by Medical Park Place Medical Complex, LLC for the benefit of G&E HC
REIT II Benton Medical Plaza I & II MOB, LLC, dated May 26, 2011 (included as Exhibit 10.12 to
our Current Report on Form 8-K filed June 1, 2011 and incorporated herein by reference)

Deed of Trust Modification Agreement by and between G&E HC REIT II Charlottesville SNF, LLC
and KeyBank National Association, dated May 26, 2011 (included as Exhibit 10.15 to our Current
Report on Form 8-K filed June 1, 2011 and incorporated herein by reference)

10.54

Deed of Trust Modification Agreement by and between G&E HC REIT II Bastian SNF, LLC and
KeyBank National Association, dated May 26, 2011 (included as Exhibit 10.16 to our Current
Report on Form 8-K filed June 1, 2011 and incorporated herein by reference)

10.55

Deed of Trust Modification Agreement by and between G&E HC REIT II Lebanon SNF, LLC and
KeyBank National Association, dated May 26, 2011 (included as Exhibit 10.17 to our Current
Report on Form 8-K filed June 1, 2011 and incorporated herein by reference)

10.56

Deed of Trust Modification Agreement by and between G&E HC REIT II Midlothian SNF, LLC and
KeyBank National Association, dated May 26, 2011 (included as Exhibit 10.18 to our Current
Report on Form 8-K filed June 1, 2011 and incorporated herein by reference)

10.57

Deed of Trust Modification Agreement by and between G&E HC REIT II Low Moor SNF, LLC and
KeyBank National Association, dated May 26, 2011 (included as Exhibit 10.19 to our Current
Report on Form 8-K filed June 1, 2011 and incorporated herein by reference)

Guaranty Agreement by Grubb & Ellis Healthcare REIT II, Inc. for the benefit of Siemens
Financial Services, Inc., dated May 19, 2011 and effective as of May 27, 2011 (included as
Exhibit 10.4 to our Current Report on Form 8-K filed June 3, 2011 and incorporated herein by
reference)

Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing by G&E HC REIT II
Cape Girardeau LTACH, LLC for the benefit of Siemens Financial Services, Inc., dated May 19,
2011 and
effective as of May 27, 2011 (included as Exhibit 10.6 to our Current Report on Form 8-K
filed June 3, 2011 and incorporated herein by reference)

Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing by G&E HC REIT II
Joplin LTACH, LLC for the benefit of Siemens Financial Services, Inc., dated May 19, 2011 and
effective as of May 27, 2011 (included as Exhibit 10.7 to our Current Report on Form 8-K filed
June 3, 2011 and incorporated herein by reference)

10.66

Deed to Secure Debt, Assignment of Rents and Security Agreement by G&E HC REIT II Athens
LTACH, LLC for the benefit of Siemens Financial Services, Inc., dated May 19, 2011 and
effective as of May 27, 2011 (included as Exhibit 10.8 to our Current Report on Form 8-K filed
June 3, 2011 and incorporated herein by reference)

10.67

Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing by G&E HC REIT II
Columbia LTACH, LLC for the benefit of Siemens Financial Services, Inc., dated May 19, 2011
and effective as of May 27, 2011 (included as Exhibit 10.9 to our Current Report on Form 8-K
filed June 3, 2011 and incorporated herein by reference)

10.68

Modification Agreement by and between G&E HC REIT II Lawton MOB Portfolio, LLC and U.S. Bank
National Association, dated June 7, 2011 (included as Exhibit 10.1 to our Current Report on
Form 8-K filed June 13, 2011 and incorporated herein by reference)

10.69

Agreement of Purchase and Sale by and between G&E HC REIT II Care Pavilion SNF, L.P. and
Care Pavilion, Inc., dated June 14, 2011 (included as Exhibit 10.1 to our Current Report on
Form 8-K filed June 20, 2011 and incorporated herein by reference)

10.70

Agreement of Purchase and Sale by and between G&E HC REIT II Cheltenham York SNF, L.P. and
Cheltenham York Road Nursing and Rehabilitation Center, Inc., dated June 14, 2011 (included as
Exhibit 10.2 to our Current Report on Form 8-K filed June 20, 2011 and incorporated herein by
reference)

10.71

Agreement of Purchase and Sale by and between G&E HC REIT II Cliveden SNF, L.P. and
Cliveden-Maplewood Convalescent Centers, Inc., dated June 14, 2011 (included as Exhibit 10.3
to our Current Report on Form 8-K filed June 20, 2011 and incorporated herein by reference)

10.72

Agreement of Purchase and Sale by and between G&E HC REIT II Maplewood Manor SNF, L.P. and
Cliveden-Maplewood Convalescent Centers, Inc., dated June 14, 2011 (included as Exhibit 10.4
to our Current Report on Form 8-K filed June 20, 2011 and incorporated herein by reference)

10.73

Agreement of Purchase and Sale by and between G&E HC REIT II Tucker House SNF, L.P. and
Tucker House II, Inc., dated June 14, 2011 (included as Exhibit 10.5 to our Current Report on
Form 8-K filed June 20, 2011 and incorporated herein by reference)

10.74

Bill of Sale by and between G&E HC REIT II Care Pavilion SNF, L.P. and Care Pavilion, Inc.,
dated June 30, 2011 (included as Exhibit 10.1 to our Current Report on Form 8-K filed July 7,
2011 and incorporated herein by reference)

10.75

Bill of Sale by and between G&E HC REIT II Cheltenham York SNF, L.P. and Cheltenham York
Road Nursing and Rehabilitation Center, Inc., dated June 30, 2011 (included as Exhibit 10.2 to
our Current Report on Form 8-K filed July 7, 2011 and incorporated herein by reference)

10.76

Bill of Sale by and between G&E HC REIT II Cliveden SNF, L.P. and Cliveden-Maplewood
Convalescent Centers, Inc., dated June 30, 2011 (included as Exhibit 10.3 to our Current
Report on Form 8-K filed July 7, 2011 and incorporated herein by reference)

10.77

Bill of Sale by and between G&E HC REIT II Maplewood Manor SNF, L.P. and Cliveden-Maplewood
Convalescent Centers, Inc., dated June 30, 2011 (included as Exhibit 10.4 to our Current
Report on Form 8-K filed July 7, 2011 and incorporated herein by reference)

10.78

Bill of Sale by and between G&E HC REIT II Tucker House SNF, L.P. and Tucker House II, Inc.,
dated June 30, 2011 (included as Exhibit 10.5 to our Current Report on Form 8-K filed July 7,
2011 and incorporated herein by reference)

10.79

Deed by Care Pavilion, Inc. for the benefit of G&E HC REIT II Care Pavilion SNF, L.P., dated
June 30, 2011 (included as Exhibit 10.6 to our Current Report on Form 8-K filed July 7, 2011
and incorporated herein by reference)

10.80

Deed by Tucker House II, Inc. for the benefit of G&E HC REIT II Tucker House SNF, L.P.,
dated June 30, 2011 (included as Exhibit 10.10 to our Current Report on Form 8-K filed July 7,
2011 and incorporated herein by reference)

10.81

Promissory Note by and between Grubb & Ellis Healthcare REIT II Holdings, LP and KeyBank
National Association, dated June 30, 2011 (included as Exhibit 10.11 to our Current Report on
Form 8-K filed July 7, 2011 and incorporated herein by reference)

Credit Agreement by and between Grubb & Ellis Healthcare REIT II Holdings, LP and KeyBank
National Association, dated June 30, 2011 (included as Exhibit 10.12 to our Current Report on
Form 8-K filed July 7, 2011 and incorporated herein by reference)

Letter Fee Agreement by and between Grubb & Ellis Healthcare REIT II Holdings, LP and
KeyBank National Association, dated June 30, 2011 (included as Exhibit 10.14 to our Current
Report on Form 8-K filed July 7, 2011 and incorporated herein by reference)

10.85

Parent Guaranty Agreement by Grubb & Ellis Healthcare REIT II, Inc. for the benefit of
KeyBank National Association, dated June 30, 2011 (included as Exhibit 10.15 to our Current
Report on Form 8-K filed July 7, 2011 and incorporated herein by reference)

Open-End Mortgage, Assignment of Rents, Security Agreement and Fixture Filing by G&E HC REIT
II Care Pavilion SNF, L.P. to Grubb & Ellis Healthcare REIT II Holdings, LP and to KeyBank
National Association, dated June 23, 2011 and effective as of June 30, 2011 (included as
Exhibit 10.17 to our Current Report on Form 8-K filed July 7, 2011 and incorporated herein by
reference)

10.88

Open-End Mortgage, Assignment of Rents, Security Agreement and Fixture Filing by G&E HC REIT
II Cheltenham York SNF, L.P. to Grubb & Ellis Healthcare REIT II Holdings, LP and to KeyBank
National Association, dated June 23, 2011 and effective as of June 30, 2011 (included as
Exhibit 10.18 to our Current Report on Form 8-K filed July 7, 2011 and incorporated herein by
reference)

10.89

Open-End Mortgage, Assignment of Rents, Security Agreement and Fixture Filing by G&E HC REIT
II Cliveden SNF, L.P. to Grubb & Ellis Healthcare REIT II Holdings, LP and to KeyBank National
Association, dated June 23, 2011 and effective as of June 30, 2011 (included as Exhibit 10.19
to our Current Report on Form 8-K filed July 7, 2011 and incorporated herein by reference)

10.90

Open-End Mortgage, Assignment of Rents, Security Agreement and Fixture Filing by G&E HC REIT
II Maplewood Manor SNF, L.P. to Grubb & Ellis Healthcare REIT II Holdings, LP and to KeyBank
National Association, dated June 23, 2011 and effective as of June 30, 2011 (included as
Exhibit 10.20 to our Current Report on Form 8-K filed July 7, 2011 and incorporated herein by
reference)

10.91

Open-End Mortgage, Assignment of Rents, Security Agreement and Fixture Filing by G&E HC REIT
II Tucker House SNF, L.P. to Grubb & Ellis Healthcare REIT II Holdings, LP and to KeyBank
National Association, dated June 23, 2011 and effective as of June 30, 2011 (included as
Exhibit 10.21 to our Current Report on Form 8-K filed July 7, 2011 and incorporated herein by
reference)

Special Warranty Deed by Cliveden-Maplewood Convalescent Centers, Inc. for the benefit of
G&E HC REIT II Cliveden SNF, L.P., dated June 30, 2011 (included as Exhibit 10.1 to our
Current Report on Form 8-K/A filed July 11, 2011 and incorporated herein by reference)

10.98

Deed by Cliveden-Maplewood Convalescent Centers, Inc. for the benefit of G&E HC REIT II
Maplewood Manor SNF, L.P., dated June 30, 2011 (included as Exhibit 10.2 to our Current Report
on Form 8-K/A filed July 11, 2011 and incorporated herein by reference)

10.99

Deed by Tucker House II, Inc. for the benefit of G&E HC REIT II Tucker House SNF, L.P.,
dated June 30, 2011(included as Exhibit 10.3 to our Current Report on Form 8-K/A filed July
11, 2011 and incorporated herein by reference)

10.100

Deed by Philadelphia Authority for Industrial Development for the benefit of G&E HC REIT II
Maplewood Manor SNF, L.P., dated June 30, 2011 (included as Exhibit 10.4 to our Current Report
on Form 8-K/A filed July 11, 2011 and incorporated herein by reference)

31.1

*

Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

*

Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

**

Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as created by
Section 906 of the Sarbanes-Oxley Act of 2002

32.2

**

Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as created by
Section 906 of the Sarbanes-Oxley Act of 2002

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